In a perfectly competitive labor market, the labor supply curve facing the firm will be

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, each firm is a wage taker, meaning it cannot influence the wage rate. Therefore, the firm's labor demand curve is perfectly elastic and horizontal at the market wage rate. As a result, the labor supply facing the firm is also perfectly elastic and horizontal, indicating that the firm can hire as many workers as it wants at the market wage rate. Hence, the correct answer is C, i.e., horizontal.

In a Perfectly Competitive Labor Market, the Labor Supply Curve