How is the equilibrium wage and quantity determined in the labour market?

The equilibrium wage and quantity in the labor market are determined by the interaction between workers and employers. This process occurs through the dynamics of supply and demand.

On the supply side, workers offer their labor at various wage rates, reflecting their skills, experience, and the desirability of the job. On the demand side, employers seek to hire workers based on their business needs and the productivity of labor. When the number of workers looking for jobs at a certain wage matches the number of job openings offered by employers, the market reaches an equilibrium. At this point, the wage is stable, and the quantity of labor supplied equals the quantity demanded.

This interaction is influenced by various factors, including changes in the economy, worker skills, and employer needs; however, it fundamentally relies on the voluntary agreements reached in the labor market between employers and workers.