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What is it called where supply and demand meet on the graph to determine a price for

labor?
A. Formula Wage
B. Agreement Wage
C. Equilibrium Wage
D. Document

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User Swogger
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1 Answer

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Answer:

C. Equilibrium Wage

Step-by-step explanation:

The intersection of labor demand and supply curves forms the equilibrium wage. The term equilibrium means balanced. Firms will continue hiring more workers as long as the marginal revenue product of labor is greater than the cost of labor. In other words, a business will employ an additional worker if the benefits derived from that worker are greater than the wage paid to the worker.

If the benefits derived from hiring an extra employee match the wage rate, the organization ceases to employ. Equilibrium wage is the wage rate at which a firm stops hiring. At the equilibrium wage, the marginal revenue product of labor is equal to the wage rate. In other words, the firm will not benefits from employing an extra worker.

User Shebeer
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