Final answer:
A decrease in wealth typically leads to an increase in the quantity of labor supplied at each wage level, potentially shifting the labor supply curve to the right and causing a decrease in equilibrium wages. The initial statement is therefore false.
Step-by-step explanation:
The statement that a decrease in wealth shifts the labor supply curve to part 4 is false. The supply of labor is an upward-sloping curve, which shows that as wages increase, individuals are typically willing to supply more labor to the market and forgo leisure. This is because individuals must trade off between earning income and enjoying leisure time. Several factors can cause shifts in the labor supply curve, including changes in tastes or preferences, changes in alternative opportunities, changes in income or wealth, and changes in the population.
However, changes in wealth usually affect the position of the labor supply curve indirectly through the change in the willingness to work at each wage level. A decrease in wealth can increase the need to work (to sustain a certain standard of living), which in theory could shift the labor supply curve to the right, causing an increase in the quantity of labor supplied at each wage level. This can lead to a decrease in equilibrium wages due to the increased supply of labor.
Therefore, going by the traditional economic model, a decrease in wealth would more likely cause a rightward shift in the labor supply curve, not a leftward shift to part 4.