Assume that both the goods and the labor market are perfectly competitive.If at equilibrium,the wage rate is $20 per hour and the marginal product of labor is 4 units,the firm's marginal cost must be equal to ________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the marginal cost (MC) of producing an additional unit of output is equal to the wage rate divided by the marginal product of labor (MPL). Given a wage rate of $20 per hour and an MPL of 4 units, the MC = $20 / 4 = $5.

Assume That Both the Goods and the Labor Market Are