If Tie-Dyed T-Shirts is currently employing labor so that the wage is less than the marginal revenue product of labor, it must also be true that
A) total revenues would be greater than total costs.
B) the wage is greater than marginal cost.
C) the price of the product must be less than marginal cost.
D) the price of the product must be greater than marginal cost.

Question

Quizplus · Accepted Answer

If the wage is less than the marginal revenue product of labor, it means that each additional unit of labor is adding more to revenue than it costs, implying that the price at which the product is sold (which influences marginal revenue) must be greater than the marginal cost of producing it. This is because the marginal revenue product of labor is a function of the additional output that the labor produces and the price at which that output can be sold.

If Tie-Dyed T-Shirts Is Currently Employing Labor So That the Wage