Learning Path
Question & Answer1
Understand Question2
Review Options3
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Explore TopicChoose the Best Answer
A
At labor market equilibrium, the wage rate is determined solely by the demand for labor.
B
Labor market equilibrium results in an optimal allocation of labor resources for both firms and workers.
C
If the supply of labor exceeds demand, wages will typically rise to restore equilibrium.
D
Firms will hire additional workers as long as the marginal revenue product of labor exceeds the marginal cost of labor.
E
Labor market equilibrium can be disrupted by external factors such as government regulations.
Understanding the Answer
Let's break down why this is correct
Answer
Labor market equilibrium happens when the number of workers that employers want to hire matches the number of workers looking for jobs. This balance means that there are no shortages or surpluses of workers, which helps to keep wages stable. When the market is in equilibrium, it can lead to increased job satisfaction because workers feel secure in their positions. For example, if a company needs 10 workers and exactly 10 qualified people apply, this situation shows labor market equilibrium. If demand for workers increases, it can push wages up, while a surplus of workers can lead to lower wages, affecting the overall economy.
Detailed Explanation
Other options are incorrect because This idea suggests that only demand sets wages; This statement implies that resources are always used perfectly.
Key Concepts
Labor Market Equilibrium
Wage Determination
Marginal Revenue Product of Labor
Topic
Labor Market Equilibrium
Difficulty
medium level question
Cognitive Level
understand
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