Under perfect competition,the equilibrium price of labor used to produce cloth will be equal to
A) the marginal product of labor in the production of cloth times the price of cloth.
B) the average product of labor in the production of cloth times the price of cloth.
C) the ratio of the marginal product of labor in the production of cloth to the marginal product of labor in the production of food times the ratio of the price of cloth. to the price of food.
D) the slope of the production possibility frontier.
E) the price of cloth divided by the marginal product of labor in the production of cloth.

Question

Quizplus · Accepted Answer

In perfect competition, the equilibrium price of labor is equal to the value of the marginal product of labor, which is the marginal product of labor times the price of the good produced (cloth in this case).

Under Perfect Competition,the Equilibrium Price of Labor Used to Produce