-Which of the following statements is correct regarding an individual firm which obtains its labour in a perfectly competitive labour market?
A)It faces a downward-sloping labour demand curve and a upward-sloping labour supply curve.
B)It faces an upward-sloping labour demand curve and a downward-sloping labour supply curve.
C)It faces a downward-sloping labour demand curve and a horizontal labour supply curve.
D)It faces a horizontal labour demand curve and a upward-sloping labour supply curve.

Question

-Which of the following statements is correct regarding an individual firm which obtains its labour in a perfectly competitive labour market?
A)It faces a downward-sloping labour demand curve and a upward-sloping labour supply curve. 
B)It faces an upward-sloping labour demand curve and a downward-sloping labour supply curve. 
C)It faces a downward-sloping labour demand curve and a horizontal labour supply curve. 
D)It faces a horizontal labour demand curve and a upward-sloping labour supply curve.

Quizplus · Accepted Answer

In a perfectly competitive labour market, an individual firm faces a horizontal labour supply curve because it can hire as many workers as it wants at the market wage without affecting the wage rate. The labour demand curve for the firm is downward-sloping, reflecting the law of diminishing returns.

-Which of the Following Statements Is Correct Regarding an Individual