In a perfectly competitive labor market, a profit-maximizing firm that is also perfectly competitive in the product market will:
a. face a perfectly inelastic supply curve of labor.
b. pay a wage that is equal to the price of the product.
c. pay a wage that is equal to the marginal product of labor.
d. hire more units of labor than would a firm that sells its output in a monopoly market.
e. pay a wage equal to the marginal factor cost.
Question 2
Which of the following is a possible outcome of a minimum wage imposed by a government?
a. It leads to an increase in consumer surplus.
b. It favors women and children and helps improve their standard of living.
c. It eradicates the problem of unemployment from the market.
d. It creates a labor surplus or unemployment.
e. It creates a labor deficit.
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