Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) Which of the following statements is true? A) To the left of qL, MFCL MRPL. B) To the right of qL, MFCL MFCL. D) The firm should hire qL units of labor.

Question

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market
 
-(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) Which of the following statements is true?
A) To the left of qL, MFCL > MRPL. 
B) To the right of qL, MFCL < MRPL. 
C) The firm should hire where MRPL > MFCL. 
D) The firm should hire qL units of labor.

Quizplus · Accepted Answer

In a perfectly competitive labor market, the firm maximizes profit by hiring labor up to the point where the marginal factor cost of labor (MFCL) equals the marginal revenue product of labor (MRPL), which is at qL.

Use the Following to Answer Question(s): Demand and Supply in a Perfectly