Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The firm must increase wages to hire more workers.
B
The wage rate remains constant regardless of the number of workers hired.
C
The firm can hire any number of workers at the current wage rate.
D
The labor supply is perfectly inelastic.
Understanding the Answer
Let's break down why this is correct
Answer
If a firm's labor supply curve is horizontal, it means that the firm can hire as many workers as it wants at a fixed wage rate. This indicates that the wage does not change regardless of how many employees the firm decides to hire. For example, if a company offers $15 per hour, it will pay this same amount whether it employs 10 workers or 50 workers. This situation often happens in competitive labor markets where many workers are available, and the firm has to pay a market wage to attract them. Therefore, the employment level can increase significantly without affecting the wage rate.
Detailed Explanation
A horizontal labor supply curve means that the wage stays the same no matter how many workers are hired. Other options are incorrect because Some might think that a firm needs to raise wages to get more workers; This option suggests that the firm can hire any number of workers without limits.
Key Concepts
Labor Supply Curve
Wage Rate
Employment Level
Topic
Labor Supply and Demand Graphing
Difficulty
easy level question
Cognitive Level
understand
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