A firm is deciding how many workers to hire based on the MRPL and the marginal factor cost. Which of the following scenarios best illustrates the equilibrium point in a perfectly competitive labor market?

In a perfectly competitive labor market, a firm hires workers until the marginal revenue product of labor (MRPL) equals the marginal factor cost (MFC) of hiring an additional worker. The MRPL represents the additional revenue generated from employing one more worker, while the MFC is the cost of hiring that worker. For example, if a firm finds that hiring a fifth worker generates $100 in additional revenue (MRPL) and costs $100 (MFC), it is at equilibrium because the benefits of hiring that worker match the cost. If the MRPL were higher than the MFC, the firm would want to hire more workers to increase profits, while if the MFC were higher, the firm would reduce hiring. Thus, the equilibrium point occurs when these two values are equal, ensuring the firm maximizes its profits without incurring losses.