Answer in Microeconomics for Khanyisa Mvana #111337
April 21st, 2023
The equilibrium of the graph is the point at whic demand for labor and supply are equal.It is also the point at whichthe marginal revenue product of labor is equal to the MPL multiplied by the price of output. The MRPL represents the additional revenue that a firm can expect to gain from employing one additional unit of labor.It is the marginal benefit to the firm from labor. Under the above assumptions, the MRPL is decreasing as the quantity of labor increases, and firms can increase profit by hiring more labor if the MRPL is greater than the marginal cost of that additional unit of labor – the wage rate. The point at which the MRPL equals the prevailing wage rate is the labor market equilibrium.