A profit-maximizing firm will hire workers up to the quantity of labor where: A)VMPL W. B)VMPL = W. C)VMPL

Question

A profit-maximizing firm will hire workers up to the quantity of labor where:
A)VMPL > W.
B)VMPL = W.
C)VMPL < W.
D)MP × MR = VMPL.

Quizplus · Accepted Answer

A profit-maximizing firm will hire workers up to the point where the value of their marginal product (VMPL) equals the wage rate (W), which is option B. If VMPL is greater than W (option A), then hiring more workers would increase profits. If VMPL is less than W (option C), then hiring fewer workers would increase profits. Option D is not a relevant criterion for determining the quantity of labor to hire.

A Profit-Maximizing Firm Will Hire Workers Up to the Quantity