The quantity of labour demanded by a firm in a competitive labour market is such that the
A) wage rate equals the marginal cost.
B) wage rate equals the marginal product of labour.
C) wage rate equals the value of marginal product of labour.
D) marginal revenue equals the marginal product.

Question

Quizplus · Accepted Answer

In a competitive labor market, the quantity of labor demanded by a firm is determined at the point where the wage rate equals the value of the marginal product of labor. This is because firms will hire additional workers up to the point where the cost of hiring an additional worker (the wage rate) equals the additional revenue generated by that worker (the value of the marginal product of labor).

The Quantity of Labour Demanded by a Firm in a Competitive