Assume that both the goods and the labor market are perfectly competitive.If at equilibrium,the marginal cost faced by a firm is $6 and the marginal product of the last unit of labor hired by the firm is 2 units,the market wage rate must be ________.

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, the wage rate equals the marginal cost of labor, which is the marginal cost divided by the marginal product of labor. Thus, $6 / 2 = $3 per unit of output, and since the marginal product is 2 units, the wage rate is $6 * 2 = $12.

Assume That Both the Goods and the Labor Market Are