The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. A month later, the labor demand curve shifts to LD₂.

-Refer to the figure above.Determine the initial equilibrium employment and wage rate.

Question

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. A month later, the labor demand curve shifts to LD₂.
 
-Refer to the figure above.Determine the initial equilibrium employment and wage rate.

Quizplus · Accepted Answer

The initial equilibrium employment and wage rate are determined by the intersection of the supply and demand curves for labor. Choice C, 20 units of labor and $25, correctly identifies this intersection point, indicating the equilibrium where the quantity of labor supplied equals the quantity of labor demanded at a wage rate of $25.

The Following Figure Shows the Labor Demand Curve, LD₁, and Labor