Suppose a Firm Hires Both Labor (L) and Capital (C)

Multiple Choice

Suppose a firm hires both labor (L) and capital (C) under purely competitive conditions.The price of labor is PL, and that of capital is PC.The marginal product of labor is MPL, and that of capital is MPC.The firm sells its product competitively at a price of PX.In competitive labor markets, the marginal cost of an additional unit of labor

A) is equal to PL × MPL.
B) is equal to MPL/PL.
C) is equal to PL.
D) cannot be determined from the information given.Difficulty: 02 Medium