Multiple Choice
Which of the following best describes what happens to market equilibrium when the majority of consumers enter the market and it reaches its full market potential?
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3. The Market Forces of Supply and Demand
Market Equilibrium
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Which point on the labor market graph represents the equilibrium wage?
A
Any point above the labor demand curve
B
The lowest point on the labor demand curve
C
The intersection of the labor supply and labor demand curves
D
The highest point on the labor supply curve
Verified step by step guidance1
Understand that the labor market equilibrium occurs where the quantity of labor demanded equals the quantity of labor supplied.
Identify the labor demand curve, which shows the relationship between the wage rate and the quantity of labor firms want to hire.
Identify the labor supply curve, which shows the relationship between the wage rate and the quantity of labor workers are willing to offer.
Locate the point where the labor demand curve and the labor supply curve intersect; this point represents the equilibrium wage and employment level.
Recognize that any point above the labor demand curve or below the labor supply curve does not represent equilibrium because either labor is in surplus or shortage.
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