Answer to Question #70535 in Microeconomics for jason chan
hi! just want to ask why in a perfect competitive labour market, the supply curve of labour to a firm is perfectly elastic? i believe this is similar to the demand curve of a firm in a perfectly competitive market, but if it this is true then shouldn't the demand curve for labour be perfectly elastic not the supply curve? However, I know the whole MPR and diminishing returns things that make the demand curve for labour downward sloping. So, this is contradicting! Also, why is the supply curve for labour in a monopoly upward sloping? If there is only ONE buyer in the labour market, shouldn't the workers be satisfied with lower wages as there is only one employer? if that employer don't employ them, then they will have no job!
Consequently, on the ideal competitive labor market, the demand curve and the propposition curve coincide, and are absolutely elastic. After all, with the increase in the number of manpower, the price of labor does not very much.
In fact, with a monopoly curve, the supply of labor is close to perfect elasticity and even has a slope down.