Answer to Question #87741 in Microeconomics for Michael

Question

Which of the following is true of profit maximising level of employment in a perfectly competitive labour market

(1) the marginal revenue product equals the value of marginal product
(2) the marginal revenue product equals the marginal cost of labour
(3) the marginal product equals the marginal revenue product
(4) the marginal product equals the marginal cost of labour

Answer 1

At the profit maximizing level of employment in a perfectly competitive labor market, the marginal revenue product (MRP) equals the marginal cost of labor (MCL).