Final answer:
The relationship between the quantity of labor demanded and supplied is determined by the real wage rate. The correct answer is C, indicating that both the demand and supply of labor are related to the real wage rate. This forms the basis for equilibrium in labor markets, balancing employment and wages.
Step-by-step explanation:
The demand for labor is the relationship between the quantity of labor demanded and the real wage rate. The supply of labor is the relationship between the quantity of labor supplied and the real wage rate. The correct answer is option C: real wage rate; real wage rate.
In labor markets, employers decide how much labor to demand at a given wage rate, and workers decide how much labor to supply. A higher wage results in a decrease in the quantity of labor demanded due to the law of demand, while a lower wage encourages employers to demand more labor. Conversely, a higher price for labor typically increases the quantity of labor supplied in accordance with the law of supply, whereas a lower price reduces the quantity supplied.
Each labor market aims for equilibrium where the quantity of labor demanded equals the quantity of labor supplied, resulting in stable employment and wage levels in a competitive market.