Suppose the market for labor is perfectly competitive and the demand for labor is $L = 100 - 10 w$ and market supply is $L = - 20 + 10 w$ .The equilibrium wage will be
A)5
B)6
C)7
D)8

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, the equilibrium wage rate (w*) occurs where the demand for labor equals the supply of labor.

To find w*, we set demand equal to supply:

100 - 10w* = -20 + 10w*

120 = 20w*

w* = 6

Therefore, the equilibrium wage rate in this market is $6.

Suppose the Market for Labor Is Perfectly Competitive and the Demand