In a perfectly competitive labor market, the equilibrium wage is determined where the marginal revenue product of labor (MRPL) equals the __________.

In a perfectly competitive labor market, the equilibrium wage is determined where the marginal revenue product of labor (MRPL) equals the marginal cost of hiring an additional worker. This means that the value created by the last worker hired is equal to the cost of paying that worker. When firms hire workers, they look for the point where the extra revenue generated by one more worker matches the wage they must pay. For example, if a company finds that hiring a worker increases their revenue by $20, they will only hire that worker if they can pay them $20 or less. At this point, the labor market is balanced, and neither workers nor employers have an incentive to change the wage.