In the Following Graph, Q_S1 is the Supply Curve for Labour

question 89

Multiple Choice

In the following graph, Q_S1 is the supply curve for labour and Q_D1 and Q_D2 are the demand curves for labour. Refer to the graph to answer the question.
When Q_D1 shifts to Q_D2, _____.

• A) the equilibrium quantity of labour and the wage level remain unchanged
• B) the quantity of labour supplied increases
• C) the wage level falls to W₃
• D) the supply of labour exceeds the demand for labour

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Definitions:

MC

Short for Marginal Cost, it refers to the change in total cost that arises when the quantity produced is incremented by one unit.

MR

Marginal Revenue, the additional income that is gained from selling one more unit of a good or service.

Purely Competitive Seller

A seller operating in a market where there are many buyers and sellers, no barriers to entry, and products are homogenous, leading to perfect competition.

Total Fixed Cost

The sum of all costs that do not change with the level of output, such as rent, salaries, and insurance premiums.