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In: Economics

With regard to the demand and supply of labor, explain the concept of the equilibrium wage

With regard to the demand and supply of labor, explain the concept of the equilibrium wage

Solutions

Expert Solution

If we talk about a demand and supply curve then it shows the relationship between demand and supply

The demand curve is upward sloping in nature

The supply curve is downward sloping in nature

The point at which they intersect is called equilibrium

The price corresponding to equilibrium is called equilibrium price and the quantity corresponding to equilibrium is called equilibrium quantity

Similar happens in case of labour as well where demand and supply intersects

Demand represents the demand of labour in the market and supply represent the supply of labour in the market

It can be anyone like teenager supply and teenager demand in the job market

So the point at which demand and supply of labour intersect is called equilibrium because the workers are paid wages and the quantity corresponding at which they intersect is called equilibrium quantity of labour

Rahul Sunny answered 9 months ago
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