Figure 18-7
-Refer to Figure 18-7. If the relevant labor supply curve is S2 and the current wage is W1,

Question

Figure 18-7 
-Refer to Figure 18-7. If the relevant labor supply curve is S2 and the current wage is W1,

Quizplus · Accepted Answer

When the labor supply curve is S2 and the current wage is W1, there is an excess supply of labor or surplus of labor. This is because the quantity of labor supplied (Q2) is greater than the quantity of labor demanded (Q1) at the given wage rate W1. As a result, firms may not need to raise the wage rate to restore equilibrium as there is already more labor available at the current wage rate.

Figure 18-7 -Refer to Figure 18-7. If the Relevant Labor Supply Curve