Explain about the equilibrium in the labor market, Managerial Economics

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Explain about the equilibrium in the labor market.

Equilibrium into the Labor Market:

All of firm will hire labor up to the point at that the value of the marginal product of labor is equivalent to the equilibrium wage rate.

VMPL = Wage or MRP = Wage (AP)

Into equilibrium, the marginal product of labor will be similar for all employers.

Therefore the equilibrium or market wage rate is equivalent to the equilibrium value of the marginal product.


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