Figure 18-7
-Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the

Question

Figure 18-7 
-Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the

Quizplus · Accepted Answer

When the labor supply curve is S1 and the labor market is in equilibrium, the wage rate is W1, which is the price of labor in the market. This is also the opportunity cost of leisure for workers since they must forgo leisure time to work for pay. Additionally, W1 represents the value of the marginal product of labor to firms since this is the amount of additional revenue that each additional worker generates for the firm. Therefore, all of the above statements are correct.

Figure 18-7 -Refer to Figure 18-7. When the Relevant Labor Supply Curve