In the graph of supply and demand in the market for labor:
A) individuals make up the demand curve.
B) the equilibrium price of labor is generally denoted as L*.
C) firms provide the demand.
D) equilibrium is rarely achieved.

Question

Quizplus · Accepted Answer

In the market for labor, firms provide the demand for labor. This is because firms are the ones who hire workers and require labor to produce goods and services. The supply of labor, on the other hand, comes from individuals who are willing and able to work. The equilibrium price of labor is denoted as W* (not L*). In a perfectly competitive labor market, equilibrium is achieved when the supply of labor equals the demand for labor, and this is the point where the equilibrium wage rate (W*) is determined. Therefore, choice C is the correct answer.

In the Graph of Supply and Demand in the Market