The correct answer is: a decrease in the labor demand.
Here's the reasoning:
- A decrease in labor demand means that employers want to hire fewer workers at any given wage, which would typically lead to a lower equilibrium quantity of labor. However, if this decline in demand is significant, it can also put upward pressure on wages as remaining employers compete for a reduced number of workers who might still be looking for jobs, causing the equilibrium wage rate to increase.
So, the scenario where labor demand decreases could lead to an increase in the wage rate while simultaneously decreasing the quantity of labor employed.