Final answer:
A perfectly competitive firm will hire more labor when the market wage is equal to the value of the marginal product of labor, as this is the profit-maximizing point of equilibrium in a competitive labor market.
Step-by-step explanation:
A perfectly competitive firm facing a competitive labor market will hire more labor whenever the market wage equals the value of the marginal product of labor (VMPL). This is because in a perfectly competitive labor market, firms can hire all the labor they want at the going wage, leading to a situation where the supply curve for labor is horizontal. Therefore, profit-maximizing firms hire workers up to the point where Wmkt = VMPL, which is the equilibrium point of employment for these firms.
Graphically, this is shown where the supply of labor intersects with the demand for labor at a specific wage rate. Hence, anytime a firm's revenue from hiring an additional worker (VMPL) exceeds or equals the market wage (Wmkt), it is beneficial for the firm to hire more labor.