In equilibrium in a perfectly competitive labor market, the price of labor: A) is the same as the MFC_L. B) is less than the MRP_L. C) times MP_L is equal to the MFC_L. D) per unit of time is higher than the wage per unit of time.

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, the price of labor (wage) is determined by the intersection of the supply and demand for labor, ensuring that the wage equals the marginal factor cost of labor (MFCL). This equilibrium condition means that firms are paying a wage equal to the additional cost of hiring one more unit of labor.

In Equilibrium in a Perfectly Competitive Labor Market, the Price