The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor

-According to Figure 14.6, what is the wage and quantity of labor hired by a competitive firm?
A)$12 and 75 laborers
B)$20 and 75 laborers
C)$15 and 125 laborers
D)$10 and 250 laborers
E)$23 and 50 laborers

Question

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor
 
-According to Figure 14.6, what is the wage and quantity of labor hired by a competitive firm?
A)$12 and 75 laborers 
B)$20 and 75 laborers 
C)$15 and 125 laborers 
D)$10 and 250 laborers 
E)$23 and 50 laborers

Quizplus · Accepted Answer

The equilibrium wage and quantity of labor hired by a competitive firm occur at the intersection of the demand and supply curves, which is at a wage of $15 and a quantity of 125 laborers. This is because at this wage, the quantity of labor supplied by workers is equal to the quantity of labor demanded by firms. So, choice C, $15 and 125 laborers, is the correct answer.

The Figure Given Below Represents Equilibrium in the Labor Market