If the demand for labor is greater than the supply,
A then the price of labor is lower.
B the price of labor is higher.
C there are fewer jobs available.
D a. and c.
E b. and c
The correct answer and explanation is:
The correct answer is B: the price of labor is higher.
When the demand for labor exceeds its supply, employers must compete for the limited number of available workers. This competition typically leads to higher wages or salaries as employers try to attract and retain employees. The scarcity of workers increases the perceived value of labor, resulting in higher compensation to entice workers to fill the available positions.
Labor markets, like any other markets, operate on the principles of supply and demand. When the demand for labor rises—perhaps due to economic growth, an increase in business activity, or other factors—the number of jobs increases. However, if the supply of labor does not increase to meet this demand, employers find themselves struggling to fill positions. This situation results in higher wages as they attempt to incentivize workers to take jobs or to work harder hours.
This scenario is the opposite of what happens when labor supply exceeds demand. In such a case, there are more workers than available jobs, leading to downward pressure on wages as employers have the luxury of choosing from a larger pool of candidates.
In conclusion, when the demand for labor surpasses its supply, the price of labor (i.e., wages) tends to rise because of increased competition for a limited number of workers. It does not result in fewer jobs being available, which would be more likely in a situation of labor oversupply.