For a firm hiring labor and selling its output in perfectly competitive markets: A)P_L = MWC and VMP = MRP B)P_L = MWC and VMP MRP C)P_L MWC and VMP = MRP D)P_L MWC and VMP MRP

Question

For a firm hiring labor and selling its output in perfectly competitive markets: A)P_L = MWC and VMP = MRP B)P_L = MWC and VMP > MRP C)P_L > MWC and VMP = MRP D)P_L > MWC and VMP > MRP

Quizplus · Accepted Answer

P_L = MWC (Profit maximizing condition in a perfectly competitive labor market) VMP = MRP (Profit maximizing condition in a perfectly competitive output market) These two conditions are satisfied simultaneously in a perfectly competitive market, hence option A is the correct answer.

For a Firm Hiring Labor and Selling Its Output in Perfectly