TABLE 13 - market wage rate , which is determined by the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
TABLE 1 Marginal Revenue Product of Labor Labor input (workers) Total product (number of goods) Marginal product of labor Marginal revenue product of labor 0 0 1 9 9 $90 2 17 8 80 3 22 5 50 4 25 3 30 5 26 1 10 The marginal revenue product of each additional worker is found by multiplying the marginal product  of each additional worker by the market price of $10. The marginal revenue product of labor is the  additional revenue that the firm earns from hiring an additional worker; it represents the  wage  that  the firm is  willing  to pay for each additional worker. The wage that the firm  actually  pays is the 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: market wage rate , which is determined by the market demand and market supply of labor. In a perfectly competitive labor market, the individual firm is a wage-taker ; it takes the market wage rate as given, just as the firm in a perfectly competitive product market takes the price for its output as given. The market wage rate in a perfectly competitive labor market represents the firm's marginal cost of labor , the amount the firm must pay for each additional worker that it hires....
View Full Document

This note was uploaded on 11/19/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

Ask a homework question - tutors are online