Hiring by a Firm in the Labor Market (with Capital Fixed) In a competitive labor market, a Price of firm faces a perfectly elastic supply of labor Labor and can hire as many workers as it wants at w The profit maximizing firm will hire l units of labor at the point where the marginal revenue product of labor is equal to the wage rate W L Why not hire fewe or more workers than l* MRPL= DL L Quantity of Labor Chapter 14 Slide 12Chapter 14 Slide 12 w* SL In a competitive labor market, a firm faces a perfectly elastic supply of labor and can hire as many workers as it wants at w*. Hiring by a Firm in the Labor Market (with Capital Fixed) Quantity of Labor Price of Labor Why not hire fewer or more workers than L*. MRPL = DL L* The profit maximizing firm will hire L* units of labor at the point where the marginal revenue product of labor is equal to the wage rate