The following figure represents the equilibrium in the labor markets. Figure 14.4 In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
Refer to Figure 14.4.A competitive labor market will pay the wage rate _____ and hire _____ units of labor.

Question

The following figure represents the equilibrium in the labor markets. Figure 14.4  In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
Refer to Figure 14.4.A competitive labor market will pay the wage rate _____ and hire _____ units of labor.

Quizplus · Accepted Answer

In a competitive labor market, the wage rate and quantity of labor hired are determined by the intersection of the demand (or marginal revenue product) curve and the supply curve. In this case, the equilibrium is at point A, where the demand curve intersects the supply curve. The equilibrium wage rate is WS1 and the equilibrium quantity of labor hired is U1. Therefore, the correct choice is C which shows W₂.

The Following Figure Represents the Equilibrium in the Labor Markets