Labor Demand and Labor Supply

Multiple Choice

Labor Demand and Labor Supply

The following questions refer to the accompanying diagram, which shows an industry's labor demand and labor supply. Labor and capital are the only factors used by the industry. The industry hires L units of labor at a wage of PL.


-Refer to Labor Demand and Labor Supply.Suppose firms in the industry earn zero profit.The total rental payment made to the industry's capital is measured by

A) area A.
B) area B.
C) area A + B.
D) area B + C.