Wage Negotiation Reduces Employment in Labor Market

Steps:

• Locate original equilibrium employment at point X on the quantity axis.
• After negotiation, new wage W exceeds original, so employment falls to the quantity demanded at W on the demand curve.
• Measure change as horizontal distance between original and new employment levels.
• This distance is segment RS, showing employment reduction.

Why C is correct:

• RS equals the difference in employment quantities, per labor demand curve at higher wage W.

Why the others are wrong:

• A: OR measures original employment, not the change.
• B: OT measures new employment level, not the difference.
• D: RT combines unrelated segments, ignoring demand curve shift.

Final answer: C