Suppose a firm has some power in the product market and hires labor in a perfectly competitive labor market.If the market wage rate is $20,the marginal product of the last worker hired is 5,and the firm is hiring the profit-maximizing amount of labor,then the marginal revenue product of the last worker hired is _____
A)$1.
B)$1.50.
C)$4.
D)$5.
E)$20.

Question

Quizplus · Accepted Answer

The marginal revenue product (MRP) of labor is equal to the wage rate in a perfectly competitive labor market when the firm is hiring the profit-maximizing amount of labor. Since the wage rate is $20, the MRP of the last worker hired is also $20.

Suppose a Firm Has Some Power in the Product Market