Suppose at the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as they desire. If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor. What does this indicate about the supply of janitorial services curve?

Question

Business

Matthew Fields

23 March, 12:38

Suppose at the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as they desire. If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor. What does this indicate about the supply of janitorial services curve?

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Answers (1)

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Nancy Solomon · Answer 1

The supply is perfectly elastic.

Explanation:

At the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as they desire.

If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor.

It means that the supply of janitorial service curve is a horizontal line. The supply is perfectly elastic. so at the current wage rate, the firms will be able to hire infinite workers. But when the price is reduced, the supply will become.

The value of elasticity in this situation will be infinity.