Multiple Choice QuestionIn a competitive labor market, the MRC of labor is Blank______ the market wage rate.Multiple choice question.greater thanunrelated toless thanequal to
Question
Multiple Choice QuestionIn a competitive labor market, the MRC of labor is Blank______ the market wage rate.Multiple choice question.greater thanunrelated toless thanequal to
Solution
In a competitive labor market, the Marginal Resource Cost (MRC) of labor is equal to the market wage rate.
Here's why:
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The Marginal Resource Cost (MRC) is the cost of employing an additional unit of a factor of production, in this case, labor.
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In a competitive labor market, firms are wage takers, meaning they have no control over the wage rate. The wage rate is determined by the market forces of supply and demand.
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Therefore, the cost of hiring an additional worker (MRC) is simply the market wage rate.
So, the correct answer is "equal to".
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