Question

How is wage rate determined in a perfectly competitive labour market?

Answer 1

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In a perfectly competitive market, the firm's marginal revenue product of labor is the value of the marginal product of labor. ... The wage that the firm actually pays is the market wage rate, which is determined by the market demand and market supply of labor.❤️

Answer 2

Wage rate determined by demand for and supply of labour is equal to the marginal revenue product of labour. Thus, under perfect competition in labour market, a firm will employ the amount of labour at which wage rate = MRP of labour.