Scenario 14.1
A worker in Firm A earns an income of $5,000 per month. He has been offered a job in Firm B where he will be paid a salary of $7,000 per month.
-If the resource market is perfectly competitive, the marginal factor cost is equal to the price of the resource.

Question

Quizplus · Accepted Answer

In a perfectly competitive resource market, the marginal factor cost is equal to the price of the resource. Therefore, if Firm B is able to offer a higher salary of $7,000 per month for the same type of worker, it suggests that the price of labor in the market has increased, and the worker's marginal factor cost has also increased accordingly.

Scenario 14.1 A Worker in Firm a Earns an Income of $5,000