Final answer:
The statement is false because a perfectly competitive labor market does not guarantee perfectly stable costs of production. Costs can fluctuate due to changes in supply and demand or movements across borders, indicating market dynamics beyond wage equilibrium.
Step-by-step explanation:
The statement that if markets were perfect, then labor and other costs of production would be perfectly stable is false. In a perfectly competitive labor market, firms can hire all the labor they want at the going market wage, facing a horizontal supply curve for labor. According to the first rule of labor markets, an employer will never pay a worker more than the value of the worker's marginal productivity to the firm. Costs of production, including labor, are not necessarily stable even in a perfectly competitive market because they reflect the equilibrium between supply and demand, which can change due to various external factors. For instance, an increase in demand for a particular skill set might lead to an increase in wages for workers with that skill set.
Additionally, movements across borders can occur for a variety of reasons, including differences in economic conditions, policies, or other locational advantages. Therefore, it is possible for labor and other production costs to change even in a hypothetical perfect market. Finally, market imperfections, such as the existence of a monopsony (where there is only one employer), can also lead to deviations from the stable costs presumed under perfect competition.