2 marksThe Demand for and Supply of Factors

CAPE Economics Unit 1 · 2006 · Paper 1 · Question 12(a)

Define the term 'value of the marginal product of labour' (marginal revenue product of labour).

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12(b)Explain why a perfectly competitive firm will pay a wage equal to the value of the marginal product of labour.[2 marks]
12(c)Define the terms 'transfer earnings' and 'rent'.[2 marks]

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