The profit-maximizing quantity of labour equates the marginal product of labour with
A) total factor productivity.
B) the marginal product of capital.
C) the real wage.
D) the average product of labour.
E) the slope of the production function.

Question

Quizplus · Accepted Answer

The profit-maximizing quantity of labor is where the marginal product of labor equals the real wage, as firms hire labor until the additional output from the last worker hired equals the cost of hiring that worker.

The Profit-Maximizing Quantity of Labour Equates the Marginal Product of Labour