a. Glven the competitive market for labor shown In the dlagram on the left, Indicate the equilibrlum wage rate and the equllibrium quantity of workers hired by the firm.

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Chapter1: Making Economics Decisions
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Describe wage determination in a labor market in which workers are unorganized and many firms actively compete for the serVices of
labor.
a. Given the competitive market for labor shown In the diagram on the left, indicate the equilibrium wage rate and the equilibrium
quantity of workers hired by the firm.
Instructions: (1) Use the tool provided 'A' to identify the quantity of labor hired by the firm and the wage rate paid. (2) Use the three-
point shading tool 'Nonlabor' to identify the nonlabor costs. (3) Use the four-point shading tool 'Wage cost' to identify the wage costs to
the firm.
A Single Competitive Firm
50
Тools
Competitive Labor Market
40
50
A
Nonlabor
30
40
Wage cost
20
30
10
20
D = MRP
D = MRP
10
10
20
30
40
50
Quantity of labor
Quantity of labor
Wage rate (dollars)
Wage rate (dollars)
Transcribed Image Text:Describe wage determination in a labor market in which workers are unorganized and many firms actively compete for the serVices of labor. a. Given the competitive market for labor shown In the diagram on the left, indicate the equilibrium wage rate and the equilibrium quantity of workers hired by the firm. Instructions: (1) Use the tool provided 'A' to identify the quantity of labor hired by the firm and the wage rate paid. (2) Use the three- point shading tool 'Nonlabor' to identify the nonlabor costs. (3) Use the four-point shading tool 'Wage cost' to identify the wage costs to the firm. A Single Competitive Firm 50 Тools Competitive Labor Market 40 50 A Nonlabor 30 40 Wage cost 20 30 10 20 D = MRP D = MRP 10 10 20 30 40 50 Quantity of labor Quantity of labor Wage rate (dollars) Wage rate (dollars)
Instructlons: Enter your answer as a whole number.
The labor supply curve of the individual firm is
O perfectly elastic, because it can hire any number of workers at the going wage rate.
O perfectly elastic, because the number of workers Is fixed.
O perfectly Inelastic, because the number of workers Is fixed.
O perfectly inelastic, because it can hire any number of workers at the going wage rate.
The market supply curve is
O upward sloping, because demand is downward sloping and equilibrium must occur.
O perfectly inelastic, because firms can hire any number of workers at the going wage rate.
O upward sloping, because in order to attract new workers, the wage must increase.
O perfectly elastic, because firms can hire any number of workers at the going wage rate.
b. What is the total wage cost to the firm?
Transcribed Image Text:Instructlons: Enter your answer as a whole number. The labor supply curve of the individual firm is O perfectly elastic, because it can hire any number of workers at the going wage rate. O perfectly elastic, because the number of workers Is fixed. O perfectly Inelastic, because the number of workers Is fixed. O perfectly inelastic, because it can hire any number of workers at the going wage rate. The market supply curve is O upward sloping, because demand is downward sloping and equilibrium must occur. O perfectly inelastic, because firms can hire any number of workers at the going wage rate. O upward sloping, because in order to attract new workers, the wage must increase. O perfectly elastic, because firms can hire any number of workers at the going wage rate. b. What is the total wage cost to the firm?
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