Refer to the above graph.Under purely competitive conditions in the sale of output and hiring of labor services,the wage rate will be: A) W₁ and Q₁ workers will be hired. B) W₂ and Q₂ workers will be hired. C) W₂ and Q₁ workers will be hired. D) W₃ and Q₁ workers will be hired.

Question

Quizplus · Accepted Answer

Under purely competitive conditions, the wage rate is determined by the intersection of the market demand and supply curves for labor, which is at point E, i.e. W₂. At this wage rate, firms will be willing to hire Q₂ workers. Option B is the closest to this point.

Refer to the Above Graph