Question

Which of the following is true of the marginal factor cost for a firm hiring labor in a
perfectly competitive labor market?
1) It is constant and equal to the market wage rate.
2) It is greater than the market wage rate.
3) It increases as the number of workers hired increases.
4) It is less than the market wage rate.​

Answer 1

Question

Which of the following is true of the marginal factor cost for a firm hiring labor in a perfectly competitive labor market?

1) It is constant and equal to the market wage rate.

2) It is greater than the market wage rate.

3) It increases as the number of workers hired increases.

4) It is less than the market wage rate.

Answer

4) It is less than the market wage rate.

Reason

If a labour cost is less than the market wage rate, it will help the company to earn more and enjoy profits.

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