Comparative Statics in Factor Markets
All of the following statements about comparative statics in factor markets are true EXCEPT:
A
In a competitive factor market, an increase in product demand always results in a decrease in the equilibrium wage.
B
An increase in labor supply, holding demand constant, generally leads to a lower equilibrium wage and higher employment in the labor market.
C
Comparative statics analyze the changes in market equilibrium resulting from shifts in exogenous factors.
D
An increase in product demand shifts the labor demand curve rightward, typically raising both equilibrium wage and employment.
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