A firm will not employ an input if its wage is greater than its maximum:
A)Average Revenue Product.
B)Average Product.
C)Marginal Revenue Product.
D)Marginal Product.

Question

Quizplus · Accepted Answer

Maximum input employment occurs when the wage paid to the input is equal to its marginal revenue product (MRP). Thus, a firm will not employ an input if its wage is greater than its MRP, which is described by choice C, marginal revenue product. Average revenue product (A), average product (B), and marginal product (D) are not relevant to determining the maximum input employment.

A Firm Will Not Employ an Input If Its Wage