In the basic competitive model of labor markets we see that:
A) individual firms and workers can exert a lot of influence over the wage rate.
B) individual workers have a lot of control over the wages received.
C) individual firms have a lot of control over the wages paid.
D) individual firms and workers have no control over the wage rate paid and received.

Question

Quizplus · Accepted Answer

In the basic competitive model of labor markets, the wage rate is determined by the intersection of the labor supply and demand curves. Individual firms and workers have no control over the wage rate, as they are price takers in the market. Therefore, the correct choice is D.

In the Basic Competitive Model of Labor Markets We See