The following figure represents the equilibrium in the labor markets. Figure 14.4 In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
Refer to Figure 14.4.A competitive labor market will pay the wage rate _____ and hire _____ units of labor.

Question

The following figure represents the equilibrium in the labor markets. Figure 14.4

In the figure,
MFC: Marginal Factor Cost curve
D: Demand or the Marginal Revenue Product curve
S: Supply curve
Refer to Figure 14.4.A competitive labor market will pay the wage rate _____ and hire _____ units of labor.

Quizplus · Accepted Answer

In a competitive labor market, equilibrium occurs where the marginal revenue product (MRP) equals the marginal factor cost (MFC). In the given figure, the intersection of the MRP curve (D) and the MFC curve (MFC) is at point S1U1B12. At this point, the wage rate is WS1U1B12 and the quantity of labor hired is QS1U1B12. Therefore, choice C is the correct answer.

The Following Figure Represents the Equilibrium in the Labor Markets