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December 7, 2022

Labor and Wages

Labor and Wages

The following chart provides information on

firm that hires labor competitively and sells

its product in a competitive market.

Units of Labor

Total Output

Product Price

1

14

$5

2

26

$5

3

37

$5

4

46

$5

5

53

$5

6

58

$5

a. How many units of labor would be employed if the market wage rate were $40? Why?

b. What would happen to employment if the wage rate rose to $50? Explain your answer.

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