A firm should hire an additional worker as long as the wage rate is
A)Greater than the MRP.
B)Greater than the MPP.
C)Less than or equal to the MRP.
D)Less than the MPP.

Question

Quizplus · Accepted Answer

A firm should hire an additional worker as long as the wage rate is less than or equal to the Marginal Revenue Product (MRP), which is the additional revenue generated by hiring an additional worker. If the wage rate is greater than the MRP, the firm would be paying more than the value added by the additional worker, resulting in a loss. If the wage rate is less than the Marginal Physical Product (MPP), the firm is not maximizing its profits because it could create more revenue by adding another worker.

A Firm Should Hire an Additional Worker as Long as the Wage