In a perfectly competitive labor market, a firm will continue to hire additional workers until the _____ of the last worker hired equals the marginal factor cost of labor.

In a perfectly competitive labor market, a firm will keep hiring workers until the value created by the last worker hired, known as the marginal revenue product of labor, equals the additional cost of hiring that worker, called the marginal factor cost. This means the company wants to make sure that the money earned from the last worker is equal to what it costs to pay them. For example, if hiring one more worker increases the company’s revenue by $100, the firm will continue hiring until the wage for that worker is also $100. If the wage is higher than the value the worker adds, the firm would lose money, so it stops hiring. This balance helps the firm maximize its profits while ensuring it pays workers fairly for their contributions.