If a firm hires labor such that W

Question

If a firm hires labor such that W < VMPL,then profit:
A)is maximized.
B)can be increased by hiring less labor.
C)can be increased by hiring more labor.
D)can be increased by increasing the wage.

Quizplus · Accepted Answer

When a firm hires labor such that the wage (W) is less than the value of the marginal product of labor (VMPL), it means the firm is paying less for the labor than the value the labor adds to the product. Therefore, the firm can increase its profit by hiring more labor until W equals VMPL.

If a Firm Hires Labor Such That W < VMPL,then