Question

How do individual choices subject to the available options and constraints combine with competition to generate labor market equilibria and how do changes in the broader economy and society upset these equilibria?

Answer 1

Individual choices in the economy play an important role in determination of the labor market demand curve of the economy. If choices of a consumer are inclined towards a particular good, then labor demand for manufacturing that particular good increases and if individual choices are not inclined towards that good, then labor demanded for manufacturing that particular good declines.

Changes in the broader economy and society upset these equilibrium by changing the labor demand curve or shifting the curve downwards or upward. This changes the equilibrium wage rate and the equilibrium amount of labor employed in the labor market.