Assume that perfect competition exists in output and factor markets.The P = MC rule for profit maximization implies the same level of labor use that would be implied by using the VMPL = W rule.

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Under perfect competition, the price of the output is equal to the marginal cost of production. Therefore, the profit maximizing rule is P=MC. At this level of output, the value of the marginal product of labor (VMPL) is equal to the wage rate (W). Thus, using either rule will result in the same level of labor use.

Assume That Perfect Competition Exists in Output and Factor Markets