With unchanging labor supply and demand curves,employment greater than equilibrium employment requires a real wage ________ the equilibrium real wage,at a point that is off of the labor ________ curve.
A)below,supply
B)below,demand
C)above,supply
D)above,demand

Question

Quizplus · Accepted Answer

For employment to be greater than equilibrium employment with unchanging labor supply and demand curves, the real wage must be below the equilibrium real wage to incentivize employers to hire more workers. This situation occurs at a point off of the labor supply curve because the labor supply curve represents the relationship between the wage rate and the quantity of labor that workers are willing to supply at those wage rates. When the wage is below equilibrium, it indicates that the quantity of labor supplied is less than the quantity of labor demanded at that wage, hence the point is off the supply curve.

With Unchanging Labor Supply and Demand Curves,employment Greater Than Equilibrium