For a competitive firm, which of the following quantities is equal to marginal cost?
A)wage Marginal product of labor
B)wage Value of marginal product of labor
C)price Marginal product of labor
D)price Value of marginal product of labor

Question

For a competitive firm, which of the following quantities is equal to marginal cost?
A)wage Marginal product of labor 
B)wage Value of marginal product of labor 
C)price Marginal product of labor 
D)price Value of marginal product of labor

Quizplus · Accepted Answer

Marginal cost is the additional cost incurred by the firm for producing one extra unit of output. In a competitive market, the firm is a price taker and has no control over the price. Therefore, marginal cost is equal to the cost of hiring one extra unit of labor, which is the wage rate. Therefore, choice A, which is wage, is equal to marginal cost.

For a Competitive Firm, Which of the Following Quantities Is