The following table shows total output produced by different units of capital.Table 14.3
The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue.
-In a perfectly competitive labor market, a profit-maximizing firm that is also perfectly competitive in the product market will:
A)face a perfectly inelastic supply curve of labor.
B)pay a wage that is equal to the price of the product.
C)pay a wage that is equal to the marginal product of labor.
D)hire more units of labor than would a firm that sells its output in a monopoly market.
E)pay a wage equal to the marginal factor cost.

Question

The following table shows total output produced by different units of capital.Table 14.3
The marginal revenue product of a resource is the product of the marginal product of the resource and the marginal revenue. 
-In a perfectly competitive labor market, a profit-maximizing firm that is also perfectly competitive in the product market will:
A)face a perfectly inelastic supply curve of labor. 
B)pay a wage that is equal to the price of the product. 
C)pay a wage that is equal to the marginal product of labor. 
D)hire more units of labor than would a firm that sells its output in a monopoly market. 
E)pay a wage equal to the marginal factor cost.

Quizplus · Accepted Answer

In a perfectly competitive labor market, a firm pays a wage equal to the marginal factor cost, which is also equal to the market wage rate.

The Following Table Shows Total Output Produced by Different Units