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, labour should be hired in this situation since the wage is
MRP.
A) more; greater than
B) less; less than
C) no; equal to
D) less; greater than
E) more; less than

Question

Quizplus · Accepted Answer

The marginal revenue product (MRP) is calculated as the additional output (8 units) multiplied by the price per unit ($2), which equals $16. Since the wage ($18) is greater than the MRP ($16), the firm should not hire more labor.

Consider Labour That Is Hired for $18 Per Hour