The labor demand curve for a firm in a perfectly competitive labor market is _____, and its labor supply curve is:
A) downward sloping; upward sloping.
B) downward sloping; horizontal.
C) horizontal; upward sloping.
D) horizontal; downward sloping.

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, the labor demand curve for a firm is downward sloping because as wages decrease, firms are willing to hire more workers. The labor supply curve to a single firm is horizontal, indicating that the firm can hire as many workers as it wants at the market wage rate.

The Labor Demand Curve for a Firm in a Perfectly