A firm will maximize profits in the hiring of labor if it hires where: A) MRP MFC. B) MRP = MFC. C) MRP

Question

A firm will maximize profits in the hiring of labor if it hires where:
A) MRP > MFC.
B) MRP = MFC.
C) MRP < MFC.
D) MP x MR = MRP.

Quizplus · Accepted Answer

A firm maximizes profits in the hiring of labor when the marginal revenue product (MRP) of labor equals the marginal factor cost (MFC) of labor. This ensures that the cost of hiring an additional unit of labor is exactly balanced by the revenue generated by that unit, optimizing profit.

A Firm Will Maximize Profits in the Hiring of Labor