A perfectly competitive firm will hire labor as long as the marginal revenue product of labor is
A) less than the going wage.
B) equal to the going wage.
C) greater than the going wage.
D) zero.

Question

Quizplus · Accepted Answer

A perfectly competitive firm will hire labor as long as the marginal revenue product of labor is greater than the going wage. This is because the firm can increase its profits by hiring more labor as long as the additional revenue generated by the extra labor is greater than the cost of hiring the labor.

A Perfectly Competitive Firm Will Hire Labor as Long as the Marginal