Below is a graphical illustration of Nearly Done Inc.'s marginal revenue product.The firm employs its labour in a perfectly competitive labour market.

-Which of the following statements is correct regarding the market supply of labour curve?
A)It is perfectly elastic.
B)It is upward sloping and relatively elastic.
C)It is upward sloping and relatively inelastic.
D)It is perfectly inelastic.

Question

Below is a graphical illustration of Nearly Done Inc.'s marginal revenue product.The firm employs its labour in a perfectly competitive labour market.
 
-Which of the following statements is correct regarding the market supply of labour curve?
A)It is perfectly elastic. 
B)It is upward sloping and relatively elastic. 
C)It is upward sloping and relatively inelastic. 
D)It is perfectly inelastic.

Quizplus · Accepted Answer

The market supply of labour curve is upward sloping and relatively inelastic because as the wage rate increases, more people are willing to work, but the increase in the quantity of labour supplied is not as large as the increase in the wage rate.

Below Is a Graphical Illustration of Nearly Done Inc