![]() ![]() Panel (a) shows an increase in demand for labor the wage rises to W2 and employment rises to L2. Figure 12.11 Changes in the Demand for and Supply of Labor. Short run supply curve of a perfectly competitive firm is that portion of marginal cost curve which is above average variable cost curve. a.downward sloping horizontal b.upward sloping horizontal c.downward sloping downward sloping d. ![]() Y is the production of the economy, Y* is the natural level of production, coefficient α is always positive, P is the price level, and P e is the expected price level. As we have seen, the marginal product of labor could rise because of an increase in the use of other factors of production, an improvement in technology, or an increase in human capital. In a competitive market, since entry or exit occurs until price equals the minimum of average total cost, the supply curve is perfectly elastic in the long. Study with Quizlet and memorize flashcards containing terms like In a market with perfectly competitive firms, the market demand curve is usually and the demand curve facing each individual firm.
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