If a firm hires a worker by paying her a wage lower than the value of the marginal product of the worker,it implies that ________.

Question

Quizplus · Accepted Answer

If a firm pays a worker less than the value of the worker's marginal product, it means the firm is making a profit from each additional unit of output the worker produces. Therefore, hiring more workers would increase the firm's profits, assuming the value of the marginal product of additional workers remains above the wage paid.

If a Firm Hires a Worker by Paying Her a Wage