In a competitive labor market, firms should hire workers up to the point at which the

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In a competitive labor market, firms should hire workers up to the point where the market wage (the cost of hiring an additional worker) equals the marginal revenue product (MRP). The MRP is the additional revenue a firm earns by employing one more unit of labor, holding all else constant. This principle ensures that the firm maximizes its profit by hiring workers as long as the revenue from hiring an additional worker is at least as great as the cost.

In a Competitive Labor Market, Firms Should Hire Workers Up