Wage rates in other markets are assumed constant along the labor supply curve for a particular labor market.

Question

Quizplus · Accepted Answer

The assumption of constant wage rates in other markets along the labor supply curve allows for the analysis of the impact of changes in demand and supply of labor on wages and employment in a specific labor market. It simplifies the analysis by holding other factors constant and assuming that workers are indifferent between working in different labor markets at the same wage rate.

Wage Rates in Other Markets Are Assumed Constant Along the Labor