February/March 2026 Paper 32

2026 · 30 questions · 30 parts · 30 marks

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11Wage Determination DifferentialsHard1 mark

The diagram shows the initial equilibrium in a labour market.

D_{1}

is the initial demand curve and

S_{1}

is the initial supply curve. The wage rate is W and Q workers are employed.

diagram of a labour market in initial equilibrium: initial demand curve D1 and initial supply curve S1 cross at wage rate W and quantity of labour Q; two further demand curves, D2 (steeper, closer to the origin) and D3 (further out to the right), and a further, steeper supply curve S2, are also drawn near the same part of the diagram

Which changes in the market will cause the largest increase in economic rent?

	demand for labour	supply of labour
A	shift to $D_{2}$	shift to $S_{2}$
B	shift to $D_{2}$	unchanged
C	shift to $D_{3}$	shift to $S_{2}$
D	shift to $D_{3}$	unchanged