In a competitive labour market, wages will adjust to equal the marginal product of labour.

Question

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In a perfectly competitive labour market, wages will adjust to equal the marginal product of labour. This means that an employee’s pay should reflect the value they bring to the organization through their productivity. The employer will continue to hire workers as long as the marginal product is greater than the wage paid to the workers. If the wage rate is equal to the marginal product of labour, the employer will earn zero profit.

In a Competitive Labour Market, Wages Will Adjust to Equal