Match List-I with List-II in the context of a perfectly competitive labour market:
| List-I | List-II | ||
|---|---|---|---|
| (A) | Suppliers of labour | (I) | Wage rate |
| (B) | Source of the demand for labour | (II) | Hours of work |
| (C) | Extra cost of hiring one more unit of labour | (III) | Households |
| (D) | What ‘labour’ is measured in | (IV) | Firms |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
The labour market runs the other way round from the goods market: households sell labour and firms buy it.
| List-I | List-II | Reason |
|---|---|---|
| (A) Suppliers of labour | (III) Households | People in households offer their work in return for a wage. |
| (B) Source of the demand for labour | (IV) Firms | Firms need labour to produce goods, so they demand it. |
| (C) Extra cost of hiring one more unit of labour | (I) Wage rate | Each extra unit of labour costs the firm the wage rate. |
| (D) What ‘labour’ is measured in | (II) Hours of work | Labour means the hours of work given by labourers, not the number of labourers. |
NCERT (2026-27): “Wage Determination in Labour Market Here we will briefly discuss the theory of wage determination under a perfectly competitive market structure using the demand-supply analysis. The basic difference between a labour market and a market for goods is with respect to the source of supply and demand. In the labour market, households are the suppliers of labour and the demand for labour comes from firms whereas in the market for goods, it is the opposite. Here, it is important to point out that by labour, we mean the hours of work provided by labourers and not the number of labourers.” “Wage Determination in Labour Market … The firm being a profit maximiser will always employ labour upto the point where the extra cost she incurs for employing the last unit of labour is equal to the additional benefit she earns from that unit. The extra cost of hiring one more unit of labour is the wage rate (w).” |