True or False QuestionTrue or false: In a purely competitive labor market, market supply and market demand establish the wagerate.True false question.TrueFalse

Analysis of the Statement

1. Definition of a Purely Competitive Labor Market: In a purely competitive labor market, there are many employers and many employees. No single employer or employee can influence the wage rates significantly due to the high level of competition.

2. Role of Market Supply and Demand: In economic theory, the wage rate in a competitive labor market is determined by the intersection of labor supply and labor demand. The supply curve represents the number of workers willing to work at different wage rates, while the demand curve represents the number of workers employers are willing to hire at those wage rates.

3. Conclusion: Since the market supply and demand indeed establish the wage rate in such a competitive environment, the statement holds true.

Final Answer

True: In a purely competitive labor market, market supply and market demand establish the wage rate.