Table 18.3.1
-Refer to Table 18.3.1. Table 18.3.1 gives information about the labour market in Lantis, a community in which the labour market is perfectly competitive. If the price of the good that Lantis produces increases and the value of marginal product of labour changes by $10 an hour, the equilibrium wage rate ________ an hour and the quantity of labour employed ________.

Question

Quizplus · Accepted Answer

According to the table, when the value of marginal product of labour changes by $10 an hour, the demand for labour will increase from 400 hours to 500 hours. Since the labour market is perfectly competitive, the equilibrium wage rate will increase to the point where the quantity of labour supplied equals the quantity demanded. Therefore, the equilibrium wage rate will rise to $20 an hour and the quantity of labour employed will increase to 500 hours.

Table 18.3.1 -Refer to Table 18.3.1. Table 18.3.1 Gives Information About the About