Question

If the demand for labor falls from D to D' and wages are sticky on the downward side, there will be unemployment of ________ million. a. 75 b. 100 c. 25 d. None of the above

Answer 1

There will be unemployment of 100 million. The correct option is b. 100.

Step-by-step explanation:

Note: This question is not complete because the graph is not attached. The graph is therefore provided before answering the question. See the attached photo for the graph.

From the attached graph, we have:

Equilibrium units of labor at D = 300 million

Equilibrium units of labor at D’ = 200 million

Employment If the demand for labor falls from D to D' = Equilibrium units of labor at D’ - Equilibrium units of labor at D = 300 million - 200 million = 100 million

Therefore, there will be unemployment of 100 million. The correct option is b. 100.