A competitive firm should continue to hire workers until the MRP is equal to

Question

Quizplus · Accepted Answer

A competitive firm should hire workers until the marginal revenue product (MRP) equals the market wage rate. This ensures that the firm is maximizing its profits by paying workers the value they produce. If the MRP is less than the wage rate, hiring more workers would decrease profits, and if the MRP is higher than the wage rate, hiring more workers would increase profits. Therefore, the equilibrium point is when MRP = wage rate. Choices A and B are incorrect because demand and the number of workers hired are not directly related to the MRP.

A Competitive Firm Should Continue to Hire Workers Until the MRP