Using standard economic theory,a firm should continue hiring workers until:
A)the marginal product of labor times price equals demand.
B)the quantity of labor supplied equals the quantity of labor demanded.
C)the marginal product of labor times price equals the workers' wage.
D)the marginal product of labor times the workers' wage wage equals price.

Question

Quizplus · Accepted Answer

A firm should continue to hire workers until the marginal product of labor equals the additional cost of hiring another worker, which is the wage rate. This can be expressed as the marginal product of labor times price equals the workers' wage. Therefore, choice C is the correct answer. Choices A and D do not take into account the cost of labor, and choice B only describes market equilibrium in the labor market, not the optimal level of labor for a firm.

Using Standard Economic Theory,a Firm Should Continue Hiring Workers Until