Consider labour that is hired for $18 per hour. If the last hour hired produces 8 units of output which sells for $2 per unit, that labour- hour adds _ to the firm's profit and so labour should be hired.
A) $16; less
B) - $2; less
C) $16; more
D) - $128; more
E) $0; no

Question

Quizplus · Accepted Answer

The revenue from the last hour of labor is 8 units * $2 = $16. The cost of hiring the labor is $18. Therefore, the profit from the last hour is $16 - $18 = -$2, indicating that hiring this labor hour reduces profit, so less labor should be hired.

Consider Labour That Is Hired for $18 Per Hour