Assume that this graph illustrates a perfectly competitive labor market.
If the supply of worker hours in this market shifted to the right

Question

Assume that this graph illustrates a perfectly competitive labor market. 
If the supply of worker hours in this market shifted to the right

Quizplus · Accepted Answer

According to the graph, at the initial equilibrium point E, the wage rate is W0, and the number of worker hours is H0. If the supply of worker hours in this market shifts to the right, it means that there is an increase in the supply of labor. As a result, the supply curve shifts to the right from S0 to S1.

At the new equilibrium point E1, the wage rate falls to W1, and the number of worker hours increases to H1. Therefore, the best choice is A because the equilibrium wage falls and the number of worker hours increases.

Assume That This Graph Illustrates a Perfectly Competitive Labor Market