The Figure Given Below Represents Equilibrium in the Labor Market

question 60

Multiple Choice

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

-The demand for capital, as an input in production, will decrease if:

• A)labor and capital are substitutes in production and the supply of labor decreases.
• B)the demand for the final good it produces increases.
• C)capital becomes more productive.
• D)the price of capital decreases.
• E)labor and capital are substitutes in production and the wage rate declines.

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Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at various price levels at a given period.

Labor

The effort by humans to produce goods or services in the economy.

Resource Demand Curve

A graphical representation showing the relationship between the price of a resource and the quantity of that resource demanded by firms.

Shift Factors

Variables or conditions that can cause a shift in demand or supply curves, thus changing market equilibrium.