Final answer:
If the demand for labor increases, there will be a shortage of workers, and the equilibrium wage will rise due to the market's adjustment to the increased labor demand.
Step-by-step explanation:
When the demand for labor increases, businesses need more workers to meet their production needs, which typically leads to a shortage of workers. Assuming that the labor market is competitive and wages are flexible, employers will tend to offer higher wages to attract the necessary labor. The equilibrium shifts as a result of the increased demand for labor from Do to D1, leading to both a higher equilibrium wage (from Wo to W1) and an increase in the equilibrium quantity of labor hired (from Qo to Q1).
Therefore, the final answer to the student’s question is that there will be a shortage of workers, and the equilibrium wage will rise. Neglecting any other potential market frictions or regulations, this is the natural outcome in a market where wages can adjust.