Why doesn't the marginal worker hired earn economic rent in a competitive labor market?
A) His reservation wage is less than the wage.
B) His reservation wage is greater than the wage.
C) His reservation wage is equal to the wage.
D) He is paid a wage that is lower than the others.

Question

Quizplus · Accepted Answer

In a competitive labor market, the marginal worker's reservation wage—the minimum wage they are willing to accept for their labor—is equal to the wage they are paid. This means they are earning exactly what they believe their labor is worth, leaving no room for economic rent, which would be additional value above their reservation wage.

Why Doesn't the Marginal Worker Hired Earn Economic Rent in a Competitive