In a Competitive Market for Labor, the Equilibrium Wage Always

question 224

True/False

In a competitive market for labor, the equilibrium wage always equals the value of the marginal product.

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Definitions:

Short Run

A period in which at least one factor of production is fixed, limiting the ability of the economy or firm to adjust to changes.

Long Run

A period of time in which all factors of production and costs are variable, allowing for full adjustment to change.

Marginal Cost Curve

The marginal cost curve graphically represents how the cost of producing one additional unit of a good changes as production volume varies.

Marginal Product

The increased output achieved by adding one more unit of a certain input, with all other inputs held steady.