Three of the following describe ‘labour’ as it is used in the theory of wage determination under perfect competition. Which one is the odd one out?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → It is measured as the number of labourers employed.
In the theory of wage determination, labour means the hours of work, not a head count of workers.
Option (1) It is measured as the number of labourers employed. — False. Labour is not the number of labourers. It is measured in hours of work.
Option (2) It is supplied by households. — True. In the labour market households are the sellers of labour.
Option (3) It is demanded by firms. — True. Firms hire labour to produce goods, so they are the buyers.
Option (4) It is measured as the hours of work provided by labourers. — True. Labour is counted as the hours of work that labourers give.
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.” |