When a competitive firm produces output up to the point at which the price is equal to marginal cost, it also hires labor up to the point at which the wage is equal to the
A)marginal cost of labor.
B)marginal profit of labor.
C)marginal product of labor.
D)value of the marginal product of labor.

Question

Quizplus · Accepted Answer

When a competitive firm hires labor, it will do so up to the point at which the value of the marginal product of labor is equal to the wage rate. This means that the firm will continue to hire workers as long as the additional output produced by the last worker added is greater than or equal to the wage rate paid to that worker. Therefore, the correct answer is D, which represents the value of the marginal product of labor.

When a Competitive Firm Produces Output Up to the Point