A technology company is experiencing a sudden increase in demand for its products, leading to a need for additional skilled labor. Assuming the labor market is perfectly competitive, how would this shift in demand for labor affect the equilibrium wage rate and the number of workers hired by the company? Consider the implications on the marginal revenue product of labor (MRPL) and marginal factor cost.

When a technology company faces a sudden increase in demand for its products, it will also need more skilled workers to keep up with production. In a perfectly competitive labor market, this increase in demand for labor will lead to a rise in the equilibrium wage rate because employers are willing to pay more to attract the necessary talent. As the wage rate increases, more workers will be hired until the point where the marginal revenue product of labor (MRPL), which measures the additional revenue generated by hiring one more worker, equals the marginal factor cost, or the wage paid to that worker. For example, if a company usually pays $20 per hour and suddenly raises the wage to $25 to attract more skilled workers, it will continue hiring until the extra revenue from each additional worker matches this new wage. This adjustment helps ensure that both the company and workers benefit from the increased demand in the market.