The correct option for a firm in a
Answer to Problem 6MCQ
From the available options, the correct option is the labor supply curve is horizontal.
Explanation of Solution
The firms cannot hire workers to increase or decrease the marketing wage rate because they cannot influence the market wage and due to this, they do not face any competition from other firms. And, the labor supply curve in a perfectly competitive market is horizontal because firms in this market cannot negotiate wages and they don’t affect the market price. Therefore, the labor demand curve would not be horizontal but the supply curve is as it is perfectly elastic.
Here, the correct option is a.
Introduction: In a perfectly competitive labor market, there are a number of buyers and sellers who do not impact the market wage rate.
Chapter 71 Solutions
Krugman's Economics For The Ap® Course
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education