Figure 18-3

-Refer to Figure 18-3.If the relevant labor supply curve is S₂ and the current wage is W₁,

Question

Figure 18-3
 
-Refer to Figure 18-3.If the relevant labor supply curve is S₂ and the current wage is W₁,

Quizplus · Accepted Answer

The intersection of the relevant labor supply curve (S₂) with the demand curve at the current wage rate (W₁) indicates that the quantity of labor supplied (Qs) is greater than the quantity of labor demanded (Qd). This implies a surplus of labor, meaning that there are more workers willing to work at the current wage rate than there are available jobs. Option B is incorrect as it states the opposite. Option C is also incorrect as an increase in the minimum wage may worsen the surplus of labor by causing more workers to enter the market and fewer employers to hire due to higher labor costs.

Figure 18-3 -Refer to Figure 18-3.If the Relevant Labor Supply Curve Is