Suppose the market wage facing a firm in the perfectly competitive candle-making industry is $20 per hour,and the firm sells its candles for $2 each.Given this information,the firm should hire workers until the marginal product of labor equals ________.

Question

Quizplus · Accepted Answer

The firm should hire workers until the value of the marginal product of labor equals the wage rate. Since the firm sells its candles for $2 each, to equal the wage rate of $20 per hour, the marginal product of labor must be 10 candles per hour ($20/$2 per candle = 10 candles).

Suppose the Market Wage Facing a Firm in the Perfectly