Distribution, Labour Markets and Factor Pricing Practice Questions | University Admission Economics

University Admission Economics Exam

Question 1 of 30

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A beverage company sells in a highly competitive market. A new health regulation reduces demand for sugary drinks nationwide. Holding technology constant, which statement best explains the most likely effect on the firms demand for labour?

Select one option.

Labour demand decreases because labour demand is derived from demand for the final output
Labour demand increases because wages will fall automatically
Labour demand stays unchanged because labour demand depends only on labour supply
Labour demand increases because the marginal product of labour rises when output falls
Labour demand decreases only if the government sets a minimum wage

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