The equilibrium wage

Question

Quizplus · Accepted Answer

The equilibrium wage is determined by the market demand for labor and the market supply of labor. It is the point where the quantity of labor supplied equals the quantity of labor demanded. The supply and demand for labor will vary across different labor markets, so there is no single equilibrium wage that applies to all markets. Unions can affect the wage rate in specific markets but do not eliminate the concept of equilibrium wages. Option A is incorrect, as the equilibrium wage is not the same in all labor markets, and option B is incorrect, as the supply of labor curve may not necessarily bend backward. Option C is incorrect, as while there may be multiple labor markets, each market will have its equilibrium wage. Option E is incorrect because unions do not render the equilibrium wage irrelevant, but rather may influence it in specific markets.

The Equilibrium Wage