the equilibrium quantity of labor and the equilibrium wage level decrease when course hero

What happens to the equilibrium wage level when wages are flexible?

The equilibrium quantity of labor and the equilibrium wage level decrease when: A. labor supply shifts to the right, if wages are flexible. B. labor demand shifts to the right, if wages are flexible. C. labor demand shifts to the left, if wages are flexible. D. labor supply shifts to the left, if …

What is the equilibrium cost of Labor at equilibrium?

The equilibrium level of wages rate is established on the point where demand for labor is equal to the supply of the labor. When the demand for labor decreases and shifts to the left then equilibrium quantity also decreases and the wage rate also falls, in this condition, wages rate are flexible. Thus option C is the correct answer.

How do labor unions affect the labor market equilibrium?

The equilibrium quantity of labor and the equilibrium wage level decrease when: a) labor demand shifts to the left, if wages are flexible. b) labor supply shifts to the left, if wages are flexible. c) labor supply shifts to the right, if wages are flexible. d) …

How do you find the equilibrium wage rate?

The equilibrium quantity of labor and the equilibrium wage level decrease when a from ECON 305 at University of Maryland, University College

What is equilibrium in labor market?

Equilibrium in the labor market requires that the marginal revenue product of labor is equal to the wage rate , and that MPL/PL=MPK/PK. Learning Objectives. Employ the marginal decision rule to determine the equilibrium cost of labor. Key Takeaways.

What is the supply curve of labor?

Labour supply curves are derived from the ‘labor-leisure’ trade-off. More hours worked earn higher incomes but necessitate a cut in the amount of other things workers enjoy such as going to movies, hanging out with friends, or sleeping. The opportunity cost of working is leisure time and vis versa. Considering this tradeoff, workers collectively offer a set of labor to the market which economists call the supply of labor.

What is marginal product of labor?

The marginal benefit of hiring an additional unit of labor is called the marginal product of labor: it is the additional revenue generated from the last unit of labor.

How do companies maximize profit?

In the long run, firms maximize profit by choosing the optimal combination of labor and capital to produce a given amount of output. It’s possible that an automobile company could manufacture 1,000 cars using only expensive, technologically advanced robots and machinery (capital) that do not require any human participation. It’s also possible that the company could produce the same number of vehicles using only employee work (labor), without any assistance from machines or technology. For most industries, however, relying solely on capital or solely on labor is more expensive than using some combination of the two.

What is marginal decision rule?

Firms use the marginal decision rule in order to decide what combination of labor, capital, and other factors of production to use in the creation of output.

How is the price of labor determined?

Just as in any market, the price of labor, the wage rate, is determined by the intersection of supply and demand. When the supply of labor increases the equilibrium price falls, and when the demand for labor increases the equilibrium price rises.

What is shift in demand for labor?

Thus, shifts in the demand for labor are a function of changes in the marginal product of labor. This can occur for a number of reasons.