If, for any reason the wage is held above the competitive equilibrium wage?
Correct answer: A. The quantity of labour supplied will exceed the quantity of labour demanded and there will be Unemployment
- A. The quantity of labour supplied will exceed the quantity of labour demanded and there will be Unemployment
- B. Unions will likely Strike and the wage will fall to equilibrium
- C. The quantity of labour demanded will exceed the quantity of labour supplied and there will be a labour shortage
- D. The quality of workers in the applicant pool will tend to fall
Explanation
When the wage is above equilibrium, more people want to work than firms want to hire. The resulting excess supply of labour is unemployment.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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