Use the following to answer question(s): Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets

-(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a perfectly competitive factor market, the equilibrium-employment level would be:

Question

Use the following to answer question(s): Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets
 
-(Exhibit: Wage-Employment Model in Perfectly Competitive and Monopsony Factor Markets) If this diagram portrayed a perfectly competitive factor market, the equilibrium-employment level would be:

Quizplus · Accepted Answer

In a perfectly competitive factor market, the employer has to pay the same wage rate to all the workers and thus the marginal cost of labor is constant and equal to the wage rate. The equilibrium-employment level is where the marginal cost of labor curve (MC) intersects the labor demand (D) curve, which occurs at point T in the diagram. Therefore, the equilibrium-employment level is 0T.

Use the Following to Answer Question(s): Wage-Employment Model in Perfectly