In a perfectly competitive labor market,a profit-maximizing firm will hire labor up to the point at which the _____ A)wage rate = marginal resource cost. B)wage rate marginal revenue product. E)wage rate = marginal product.

Question

In a perfectly competitive labor market,a profit-maximizing firm will hire labor up to the point at which the _____
A)wage rate = marginal resource cost.
B)wage rate < marginal revenue product.
C)wage rate = marginal revenue product.
D)wage rate > marginal revenue product.
E)wage rate = marginal product.

Quizplus · Accepted Answer

In a perfectly competitive labor market, the firms are price-takers which means they cannot influence the market wage rate. The firm will hire up to a point where the Marginal Revenue Product (MRP) of the last unit of labor hired equals the wage rate and any additional hiring would decrease profits. Therefore, a profit-maximizing firm will hire labor up to the point at which the wage rate is equal to the marginal revenue product.

In a Perfectly Competitive Labor Market,a Profit-Maximizing Firm Will Hire