In a perfectly competitive labor market, each firm can hire:
A) only a fixed amount of labor at the going wage.
B) all the labor it wants, but only by outbidding its competitors.
C) larger quantities of labor at rising wages per worker.
D) larger quantities of labor at going market wages per worker.

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, each firm can hire larger quantities of labor at going market wages per worker. This means that firms cannot offer lower wages to attract more workers as there is a pool of identical workers available in the market. Therefore, to hire more workers, firms must pay the going market wage rate.

In a Perfectly Competitive Labor Market, Each Firm Can Hire