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Suppose a firm produces output under perfect competition from labor and capital, and the wage the firm pays for labor falls. Explain why the firm
Suppose a firm produces output under perfect competition from labor and capital, and the wage the firm pays for labor falls. Explain why the firm will hire labor to the point where the marginal value product of labor equals the wage both before and after the falling the wage, but the firm's adjustment to the lower wage is not simply a shift along the initial marginal value product curve for labor.
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