Figure 17.6.1
-The "no shirking constraint" (NSC) curve never crosses the supply of labor curve, so:
A) the market never reaches equilibrium.
B) there is always full employment in equilibrium.
C) there is always some unemployment in equilibrium.
D) the efficiency wage is always lower than the market-clearing wage.
E) the gap between the NSC curve and the supply of labor curve equals the difference between the efficiency wage and the market-clearing wage.

Question

Figure 17.6.1
-The "no shirking constraint" (NSC) curve never crosses the supply of labor curve, so:
A) the market never reaches equilibrium. 
B) there is always full employment in equilibrium. 
C) there is always some unemployment in equilibrium. 
D) the efficiency wage is always lower than the market-clearing wage. 
E) the gap between the NSC curve and the supply of labor curve equals the difference between the efficiency wage and the market-clearing wage.

Quizplus · Accepted Answer

The "no shirking constraint" curve represents the minimum wage needed to ensure that workers do not shirk or underperform on the job. This curve is always above the supply of labor curve, which represents the quantity of labor supplied at different wage levels. This means that if the economy operates at the intersection of the two curves, there will always be some unemployment as the wage is too high for the quantity of labor supplied. Therefore, choice C is correct as there will always be some unemployment in equilibrium.

Figure 17.6.1 -The "No Shirking Constraint" (NSC) Curve Never Crosses the Supply