Asked by Tiffany Smith on Jul 20, 2024
Verified
The individual firm in a purely competitive labor market faces:
A) a perfectly elastic labor supply curve and a downsloping labor demand curve.
B) a perfectly elastic labor demand curve and an upsloping labor supply curve.
C) labor demand and labor supply curves both of which are perfectly elastic.
D) a downsloping labor demand curve and an upsloping labor supply curve.
Purely Competitive
Refers to a market structure where many firms sell identical products, allowing no single firm to influence the market price.
Labor Market
The supply and demand for labor, where employers are the demanders of labor and individuals are the suppliers.
Labor Supply Curve
A graphical representation showing the relationship between the quantity of labor workers are willing to offer and the wage rate, under ceteris paribus conditions.
- Comprehend the attributes of labor supply under various market circumstances.
Verified Answer
ZA
Zophar AbelloJul 21, 2024
Final Answer :
A
Explanation :
In a purely competitive labor market, firms perceive the supply of labor as perfectly elastic because they can hire as many workers as they want at the market wage without affecting the wage rate. The labor demand curve for an individual firm is downsloping, reflecting the law of diminishing returns; as a firm hires more labor, each additional worker contributes less to output, so the firm is willing to pay less for additional workers.
Learning Objectives
- Comprehend the attributes of labor supply under various market circumstances.