The MRCL, MFCL, PL, and wage rate all refer to the cost of one more unit of...

The MRC_L, MFC_L, P_L, and wage rate all refer to the cost of one more unit of labor.

A. True

B. False

Solutions

Expert Solution

B) FALSE

MRPL is the change in the firm’s total revenue resulting from a unit change in the amount of labor used and MRCL is the change in total labor cost resulting from a unit change in the number of units of labor used. Hence for MRCL and MFCL refer to the cost of one more unit of labor

PL can be abbreviated for Price Level or Wage rate (PL).

Price Level is not about one more unit of labor as a price level is the average of current prices across the entire spectrum of goods and services produced in the economy. In a more general sense, price level refers to any static picture of the price of a given good, service or tradable security.

Even the wage rate is amount of base wage paid to a worker per unit of time (as per hour or day) or per unit of output if on piecework, but again it is not about One more unit of Labor, it is about one more unit of output.

So neither the PL nor wage rate is about one more unit of labor.

Rahul Sunny answered 1 year ago

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