Which of the following is NOT true about the supply of labor to the firm in a competitive labor market?
A) It is horizontal.
B) It is perfectly elastic.
C) It is equal to the marginal expenditure curve.
D) It is upward sloping.

Question

Quizplus · Accepted Answer

In a competitive labor market, the supply of labor is perfectly elastic or horizontal, meaning that firms can hire as much labor as they want at the going market wage rate without affecting the wage rate. The marginal expenditure curve is the additional cost of hiring an additional unit of labor and is equal to the market wage rate in a perfectly competitive market. Therefore, (C) is true. However, the supply of labor is not upward sloping, as an increase in the wage rate does not necessarily lead to an increase in the quantity of labor supplied, as individuals may choose to work fewer hours or to not work at all.

Which of the Following Is NOT True About the Supply