A firm in a competitive labour market will hire labour until the value of marginal product of labour equals the
A) firm's marginal cost.
B) firm's average cost.
C) wage rate.
D) firm's marginal revenue.

Question

Quizplus · Accepted Answer

In a competitive labor market, a firm will continue to hire labor until the value of the marginal product of labor (the additional revenue generated by hiring one more unit of labor) equals the wage rate (the cost of hiring one more unit of labor). This is because at this point, the cost of hiring an additional worker equals the revenue generated by that worker, maximizing the firm's profit.

A Firm in a Competitive Labour Market Will Hire Labour