Exhibit 10-5 A perfectly competitive labor market $$\begin{array} { | l | | l | l | }
\hline \begin{array} { c }
\text { Quantity of Labor } \
\text { (thousands) }
\end{array} & \text { Marginal Revenue Product } & \text { Wage Rate } \
\hline \hline 5 & \$ 25.00 & \$ 5.00 \
\hline \hline 10 & 20.00 & 10.00 \
\hline \hline 15 & 15.00 & 15.00 \
\hline \hline 20 & 10.00 & 20.00 \
\hline \hline 25 & 5.00 & 25.00 \
\hline
\end{array}$$ In Exhibit 10-5, when the marginal revenue product is $20.00, firms should

Question

Exhibit 10-5 A perfectly competitive labor market $$\begin{array} { | l | | l | l | } 
\hline \begin{array} { c } 
\text { Quantity of Labor } \
\text { (thousands) }
\end{array} & \text { Marginal Revenue Product } & \text { Wage Rate } \
\hline \hline 5 & \$ 25.00 & \$ 5.00 \
\hline \hline 10 & 20.00 & 10.00 \
\hline \hline 15 & 15.00 & 15.00 \
\hline \hline 20 & 10.00 & 20.00 \
\hline \hline 25 & 5.00 & 25.00 \
\hline
\end{array}$$ In Exhibit 10-5, when the marginal revenue product is $20.00, firms should

Quizplus · Accepted Answer

In a perfectly competitive labor market, firms hire workers up to the point where the marginal revenue product (MRP) equals the wage rate. When MRP is $20.00, it equals the wage rate, so firms should continue hiring workers until this point.

Exhibit 10-5 a Perfectly Competitive Labor Market In Exhibit 10-5, When the Marginal Revenue Product Is $20