If, at a Particular Wage Rate in a Competitive Market

question 71

Multiple Choice

If, at a particular wage rate in a competitive market, the quantity demanded of labor exceeds the quantity supplied of labor, then

• A)the supply curve will shift to the left, the demand curve will shift to the right, and the surplus of labor will be eliminated.
• B)since wages are so low, the quantity supplied of workers will decrease further, and the quantity demanded will increase further.
• C)some workers will begin to demand higher wages, as a result, employers will begin to hire more workers.
• D)the supply curve will shift to the right, the demand curve will shift to the left, and the shortage of labor will be eliminated.
• E)none of the above

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Definitions:

Initial Endowment

The initial allocation of resources or goods that an individual or firm has before any trade takes place in an economic model.

Initial Endowment

The initial quantity of goods, services, or resources an individual, firm, or economy possesses.

Pareto Efficient

A state of allocation where it is impossible to make any one individual better off without making at least one individual worse off.

Utility Function

A mathematical representation that ranks the preferences of an individual consumer for different bundles of goods.