The following figure shows the value of the marginal product of labor curve for a perfectly competitive firm.

-Refer to the figure above.What is the equilibrium quantity of labor hired by the firm when the wage rate is $6 per hour?

Question

The following figure shows the value of the marginal product of labor curve for a perfectly competitive firm.
 
-Refer to the figure above.What is the equilibrium quantity of labor hired by the firm when the wage rate is $6 per hour?

Quizplus · Accepted Answer

At a wage rate of $6 per hour, the firm will hire the quantity of labor where the wage rate equals the value of the marginal product of labor, in this case, at a quantity of 30 hours. Any higher quantity of labor would result in a lower marginal product of labor, cutting into the firm's profits, while any lower quantity of labor would mean the firm is not utilizing its resources efficiently, missing out on potential profits.

The Following Figure Shows the Value of the Marginal Product