Assume that both the goods and the labor market are perfectly competitive.If at equilibrium,the marginal cost faced by a firm is $3 and the market wage rate is $6,the marginal product of the last unit of labor hired by the firm must be ________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm hires labor up to the point where the value of the marginal product of labor (the additional revenue generated by hiring an additional unit of labor) is equal to the wage rate. This can be expressed as:
Marginal Product of Labor * Price of Output = Wage Rate
In this case, the firm faces a marginal cost (which equals the price of output in a competitive market) of $3 and a wage rate of $6. Therefore, we can set up the equation:
Marginal Product of Labor * $3 = $6
Solving for the marginal product of labor, we get:
Marginal Product of Labor = $6/$3 = 2 units.

Assume That Both the Goods and the Labor Market Are