If individuals are paid the wage at which the supply of labor is equal to the...

If individuals are paid the wage at which the supply of labor is equal to the demand for labor,

A) no unemployment exists, and workers have no incentive to shirk.

B) no unemployment exists, and workers have an incentive to shirk.

C) some unemployment still exists, but workers have no incentive to shirk.

D) some unemployment still exists, but managers can tell whether or not workers are shirking.

Expert Solution

Option B.

When the supply of labour is equal to the demand for labour, we can say that the labour market is in equilibrium.

At this point there is no unemployment as both supply and demand for labour are balanced.

But If individuals are paid the wages at this point, the workers will have an incentive to shirk.

This means that their willingness to dedicate more of their time to work decreases.

Rahul Sunny answered 2 years ago

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