Assuming pure competition, which of the following are equivalents?
A)MRPL / PL = MRPC / PC and Px = 1/MC
B)MRPL / PL = MRPC / PC and Px = AVC
C)Px = MC and MRPL / PL = MRPC / PC = 1
D)Px = MC and MPL / PL = MPC / PC

Question

Quizplus · Accepted Answer

Px = MC and MRPL / PL = MRPC / PC = 1In pure competition, the price of the product is equal to the marginal cost of production (Px = MC). Additionally, the marginal revenue product of labor (MRPL) divided by the price of labor (PL) is equal to the marginal revenue product of capital (MRPC) divided by the price of capital (PC), and both are equal to 1.

Assuming Pure Competition, Which of the Following Are Equivalents