If firms arc competitive and profit maximizing, the demand curve for labor is de

Question

If firms arc competitive and profit maximizing, the demand curve for labor is determined by the opportunity cost of workers time the value of the marginal product of labor offsetting income and substitution effects the value of the marginal product of capital A bakery operating in a competitive market sells its pies at $20 dollars each and hires labor at $10 dollars per hour. To maximize profit, it should hire labor until the marginal product of labor is 1/2 pie per hour 2 pies per hour 10 pies per hour 15 pies per hour

Explanation / Answer

Q24) B. the value of marginal product of labor.

because the demand curve shows the optimal demand of labor when the real wage rate is equal to marginal product of labor.

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