When a Firm Is Competitive in Both Product and Factor

question 163

Multiple Choice

When a firm is competitive in both product and factor markets, which of the following statements best describes the value of the marginal product of labour?

• A) It increases, causing the labour supply curve to slope upward.
• B) It declines because the marginal product of labour diminishes as the number of workers rises.
• C) It declines because a competitive firm must lower product price in order to increase sales.
• D) It is constant and equal to the market wage.

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