For a perfectly competitive firm, the marginal-revenue product curve is the same as the firm's short run demand for labor curve.

Question

Quizplus · Accepted Answer

In perfect competition, the firm is a price taker and the product price remains constant. Therefore, the marginal revenue product (MRP) of labor will be equal to the product price multiplied by the marginal product of labor (MPL). As the product price is constant, the MRP curve will have the same shape as the firm's short run demand for labor since it represents the additional revenue generated by hiring an additional unit of labor. Thus, the statement is true.

For a Perfectly Competitive Firm, the Marginal-Revenue Product Curve Is