A competitive profit-maximizing firm should hire workers up to the point where ?
Correct answer: C. the value of the marginal product of labor equals the wage
- A. the wage, the rental price of capital and the rental price of land are all equal
- B. the marginal product of labor equals zero and the production function is maximized
- C. the value of the marginal product of labor equals the wage
- D. the marginal product of labor equals the wage
Explanation
A profit-maximizing firm hires labor while the value of the marginal product of labor exceeds the wage. It stops at the point where the value of marginal product equals the wage.
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