In competitive labor markets, the wage equals:

Question

Quizplus · Accepted Answer

In a competitive labor market, wages are determined by the balance of supply and demand. The wage will equal the marginal product of labor times the price of output because this is the value that the additional labor brings to the firm. Employers will only hire workers when the marginal product of labor is greater than the wage. Therefore, the wage must reflect the value that additional labor brings to the firm, which is the marginal product of labor times the price of output.

In Competitive Labor Markets, the Wage Equals