Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market

-(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) The firm should hire:

Question

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market
 
-(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) The firm should hire:

Quizplus · Accepted Answer

The firm should hire where MRPL (marginal revenue product of labor) is equal to MFCL (marginal factor cost of labor). This ensures that the firm is producing at an efficient level and minimizing costs. Option B is incorrect because it does not take into account the equilibrium point where quantity demanded and supplied are equal. Option C is incorrect because it is only a specific formula for MRPL and not a general rule for hiring decisions. Option D is incorrect because hiring at a lower wage than WL (the equilibrium wage rate) would result in a shortage of labor and higher labor costs in the long run.

Use the Following to Answer Question(s): Demand and Supply in a Perfectly