The tables set out information about the economy of Athabasca Table 1 Production

Question

The tables set out information about the economy of Athabasca Table 1 Production Function Suppose the labor force participation rate of Athabasca decreases When the labor force participation rate of Athabasca decreases, employment Real GDRP Labor hours (millions) 60 115 165 210 250 10 15 O A decreases OB. increases O C. either increases or decreases, but we don't know for sure 25 D. does not change Table 2 Labor Market Quantity of labor demanded Quantity of labor supplied Real wage rate (dollars per hour) 12 When the labor force participation rate of Athabasca decreases, potential GDP and the real wage rate_- of heurs per 25 OA, decreases; decreases OB, increases; doreases O C. decreases; increases OD, increases; increases 10 15 20 25 10 10 Click to select your answer

Explanation / Answer

Ans:

1) Option C

either increases or decreases , but we don't know for sure.

labor force participation rate = labor force / total number of people eligible to participate in the labor force.

A number of factors effect the labor force participation rate such as discouraged workers leaving the labor force, increase in eligable people.Hence we can not be sure.

2) Option A

decreases;decreases

The decrease in the labor force participation rate means the quantity of labor supplied is decreased which will decrease the potential GDP and real wage rate.

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