The Figure Given Below Represents Equilibrium in the Labor Market

question 72

Multiple Choice

The figure given below represents equilibrium in the labor market with the demand and supply curves of labor.Figure 14.6
In the figure,
D = MRP implies demand for labor = Marginal Revenue Product
MFC represents Marginal Factor Cost curve
S represents the supply curve of labor

-Which of the following statements brings out the relationship between the value of marginal product (VMP) and the marginal revenue product (MRP) ?

• A)They are the same for a firm selling in a perfectly competitive market structure.
• B)They are the same for a firm purchasing inputs in a perfectly competitive market structure.
• C)VMP is greater than MRP when a firm is perfectly competitive in the product market.
• D)VMP is less than MRP when a firm is perfectly competitive in the product market.
• E)They are same when a firm is a monopolist.

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Definitions:

Contribution Format

An income statement format that highlights the variable costs incurred to produce goods, allowing for the analysis of contribution margin.

Unit Sales

The total quantity of an item or product sold by a company in a given period.

Variable Manufacturing Costs

Costs that vary directly with the level of production output, including raw materials and direct labor costs.

Fixed Manufacturing Costs

Costs that remain constant regardless of the level of production or sales volume, such as rent and salaries.