According to Keynesian theory,the profit-maximizing firm demands labor up to the point at which
A)the real wage is equal to the marginal productivity of labor.
B)the money wage paid to labor is just equal to the money value of the marginal product of labor.
C)labor and capital costs are equal.
D)a and/or b are correct.

Question

Quizplus · Accepted Answer

According to Keynesian theory, the profit-maximizing firm demands labor up to the point where either the real wage is equal to the marginal productivity of labor or the money wage paid to labor is just equal to the money value of the marginal product of labor. Therefore, both options A and B are correct, making D the best choice. Option C is not correct as it does not consider the contribution of labor and capital to production separately.

According to Keynesian Theory,the Profit-Maximizing Firm Demands Labor Up to the Point