The perfectly competitive model is most likely to apply to a labor market in which

Question

Quizplus · Accepted Answer

The perfectly competitive model assumes many well-informed firms and workers, with each worker being identical to the firms. This scenario is closest to choice D, where there are many well-informed workers and firms, and there are no barriers to entry or exit for either group. In a perfectly competitive labor market, firms will hire workers until the marginal cost of hiring an additional worker equals the marginal revenue generated by that worker. Therefore, in a perfectly competitive labor market, wages will be equal to the value of the marginal product of labor, and there will be no market power on either side.

The Perfectly Competitive Model Is Most Likely to Apply to a Labor