In competitive labor markets, the wage equals:
A) the marginal product of labor times the price of output.
B) the marginal product of labor plus the price of output.
C) the marginal product of labor.
D) the price of output.

Question

Quizplus · Accepted Answer

In competitive labor markets, the wage is determined by the marginal product of labor times the price of output. This is because firms pay workers based on the additional value (marginal product) that one more worker adds to the total output, and this value is measured by how much that additional output can be sold for (price of output).

In Competitive Labor Markets, the Wage Equals