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Basic Question 10 of 13
A condition for profit maximization in a labor market is that ______
B. marginal revenue equals the wage rate.
C. marginal revenue product equals marginal cost.
A. marginal revenue product equals the wage rate.
B. marginal revenue equals the wage rate.
C. marginal revenue product equals marginal cost.
User Contributed Comments 5
| User | Comment |
|---|---|
| cahiz84 | Why is the last one wrong? |
| mordja | Because for Profit Maxization in a labor market to occur two conditions must be met : 1. MR = MC 2. MRP = Wage rate. Not Marginal revenue product = Marginal Cost. |
| Mavizo | Well explained , mordja.Thanks!!! |
| ascruggs92 | Also, MRP = MR x MP. Because MR=MC, it is also true that MRP = MC x MP. So unless MC is equal to 1, MRP cannot equal MC |
| 10425406 | if that holds for labor then what of capital? |
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Learning Outcome Statements
determine and interpret break even and shutdown points of production, as well as how economies and diseconomies of scale affect costs under perfect and imperfect competition
CFA® 2024 Level I Curriculum, Volume 1, Module 1.