Question

If the workers of a firm successfully negotiate an increase in wages, which of the following is most likely to happen? a. The demand curve for the product the firm produces shifts rightward. b. The demand curve for the product the firm produces shifts leftward. c. The supply curve of the product the firm produces shifts rightward. d. The supply curve of the product the firm produces shifts leftward.

Answer 1

The correct answer is option is d.

Step-by-step explanation:

If the workers can get their wages increased, this will lead to an increase in the cost of production, as wages are input price for the firm which is increasing. Since the cost of production is increasing, the firm will be able to produce less quantity at the same cost.

This will cause the supply to decrease. The decrease in supply will cause the supply curve to shift to the left.