Question

In a competitive market, the wage rate is determined by the interaction between A. the demand...

In a competitive market, the wage rate is determined by the interaction between

A. the demand for and the supply of labor

B. unions and employers

C. marginal revenue and marginal cost of production

D. businesses and government

E. all of the above

Business   Economics   
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Answer #1

The demand for and the supply of labor

In a competitive market, the wage rate is determined by the interaction between the demand for and the supply of labor because firms are wage takers under competitive market. The number of firms and labor are so large that any individual firm or labor fails to make any influence on the wage. It is therefore said that the firms are wage takers and so are the labors which means the wage rate is determined by interaction of the demand for and supply of labor.

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