The following figure shows a competitive labor market (supply and demand for work hours), where the price of work is also known as wages.

-Refer to the figure above.The line S₁ represent a situation where labor supply that is ________,and the line S₂ represents a situation where labor supply is ________.

Question

The following figure shows a competitive labor market (supply and demand for work hours), where the price of work is also known as wages.
 
-Refer to the figure above.The line S₁ represent a situation where labor supply that is ________,and the line S₂ represents a situation where labor supply is ________.

Quizplus · Accepted Answer

S₁ represents a situation where labor supply is relatively inelastic because a small change in wage rate has a relatively smaller effect on the quantity of labor supplied. On the other hand, S₂ represents a situation where labor supply is relatively elastic because a small change in wage rate has a relatively larger effect on the quantity of labor supplied.

The Following Figure Shows a Competitive Labor Market (Supply and Demand