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The market wage rate equals the marginal cost of labor for a wage taker. In In a purely competitive labor market, employers are wage takers. They can employ as much or as little labor as they desire, at the market wage rate. No one employer can influence the wage rate, so as wage takers, they have no market power over wages. For a wage taking firm, the wage rate is supply curve of labor to the firm. The interaction of labor demand and labor supply sets the market ...
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