Asked by Carolyn Lemon-Lewis on Jun 13, 2024
Verified
Use the labor demand data on the left and the labor supply data on the right in answering the following question: Labor Demand Data ‾ Labor Supply Data ‾Employment‾0123456MarginalProduct‾014129742 Product Price ‾$3333333Employment‾0123456 Wage Rate ‾$11111111111111\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\14\\12\\9\\7\\4\\2\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 3 \\3 \\3 \\3 \\3 \\3 \\3 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\ \$ 11 \\11 \\11 \\11 \\11 \\11 \\11\end{array}\end{array} Labor Demand Data Labor Supply Data Employment0123456MarginalProduct014129742 Product Price $3333333Employment0123456 Wage Rate $11111111111111
Refer to the given data.The firm is hiring labor:
A) at a wage rate that exceeds labor's MRP.
B) under purely competitive conditions.
C) in an imperfectly competitive market.
D) as a monopsonist.
Labor Demand Data
Information that reflects the quantity of labor that employers are willing to hire at various wage rates.
Labor Supply Data
Information or statistics that represent the total number of hours that workers are willing and able to work at different wage rates in a given time period.
- Differentiate among various market frameworks and their influence on wage determination, such as competitive versus monopsonistic markets.
Verified Answer
KH
Kayla HuggardJun 13, 2024
Final Answer :
B
Explanation :
The labor demand and supply data in the graph suggest that the market is in equilibrium at a wage rate of $15 per hour, where the quantity of labor demanded equals the quantity of labor supplied. Therefore, the firm is hiring labor under purely competitive conditions, where it has no market power to influence the wage rate and must accept the going market wage to hire the desired quantity of labor. There is no evidence to suggest that the firm is paying a wage rate that exceeds labor's MRP, operating in an imperfectly competitive market or as a monopsonist.
Learning Objectives
- Differentiate among various market frameworks and their influence on wage determination, such as competitive versus monopsonistic markets.
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