Answer the Question on the Basis of the Following Information

question 117

Multiple Choice

Answer the question on the basis of the following information: Suppose a firm hires both labor (L) and capital (C) under purely competitive conditions.The price of labor is P_L and that of capital is P_C.The marginal product of labor is MP_L and that of capital is MP_C.The firm sells its product competitively at a price of P_X. Refer to the given information.In competitive labor markets,the marginal cost of an additional unit of labor:

• A) is equal to P_L × MP_L.
• B) is equal to MP_L/P_L.
• C) is equal to P_L.
• D) cannot be determined from the information given.

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