The equilibrium wage and quantity of labour in the market for skilled workers is determined by
A) the strength of labour unions.
B) the monopsony power of firms.
C) the demand and supply of labour.
D) the market value created by the output of these skilled workers.

Question

Quizplus · Accepted Answer

The equilibrium wage and quantity of labour in any market are determined by the interaction of demand and supply. In the market for skilled workers, the demand for labour is determined by the value of their output to employers, and the supply of labour is determined by the willingness of workers to work at various wage rates. The other options, such as labour union strength and monopsony power of firms, may affect the bargaining power of workers and employers, but ultimately, it is the interaction of demand and supply that determines the equilibrium wage and quantity of labour.

The Equilibrium Wage and Quantity of Labour in the Market