A firm's ________ curve in a perfectly competitive product market is the same as its supply curve. Similarly, a firm's ________ curve in a perfectly competitive labor market is the same as its demand curve.
A) marginal revenue product; marginal cost
B) marginal cost; marginal revenue product
C) total revenue; total cost
D) total cost; total revenue

Question

Quizplus · Accepted Answer

In a perfectly competitive product market, a firm's marginal cost curve above the shutdown point acts as its supply curve because it decides the quantity of output to produce based on marginal costs. In a perfectly competitive labor market, a firm's marginal revenue product curve is its demand curve for labor, as it shows the additional revenue generated from hiring one more unit of labor.

A Firm's ________ Curve in a Perfectly Competitive Product Market