Madam Malkin's produces and sells robes, and the wage it pays its workers is set in the labor market. The value of the firm's marginal product of labor decreases as it hires more workers, even though it can always sell a robe for the same price.
Which of the following is true based on the information above?
Choose 1 answer:
(A) The firm sells in an imperfectly competitive market and hires labor in an imperfectly competitive market.
(B) The firm sells in an imperfectly competitive market and hires labor in a perfectly competitive market.
(C) The firm sells in a perfectly competitive market and hires labor in an imperfectly competitive market.
(D) The firm sells in a perfectly competitive market and hires labor in a perfectly competitive market.
(E) The firm sells in a perfectly competitive market, but we cannot determine the competitiveness of the labor market.
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