Suppose at the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as it desires. If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor. What does this indicate about the supply curve for janitorial services?
A) Supply is unit-elastic.
B) Supply is perfectly elastic.
C) Supply is perfectly inelastic.
D) Supply is relatively inelastic.

Question

Quizplus · Accepted Answer

The supply curve is perfectly elastic because firms can hire any quantity of janitorial services at $20, but cannot hire any at a lower price, indicating a horizontal supply curve at $20.

Suppose at the Going Wage Rate of $20 Per Hour