A profit maximizing firm under a perfectly competitive market employs more and more variable input labour until

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a profit-maximizing firm will continue to employ more labor until the marginal revenue product of labor (MRPL) equals the marginal expense of labor (MEL), which is also equal to the wage rate (W). This condition ensures that the firm is maximizing its profits by equating the additional revenue generated by employing one more unit of labor to the additional cost of that labor.

A Profit Maximizing Firm Under a Perfectly Competitive Market Employs