We observe a profit-maximizing firm hiring its 75th employee. It is possible to infer that, when 74 employees are hired, the

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A profit-maximizing firm will hire additional employees as long as the value of the marginal product of labor (the additional output produced by adding one more worker) is greater than or equal to the wage paid to that worker. Therefore, when the firm reaches its 75th employee, it can be inferred that the value of the marginal product of labor equals the wage paid to that worker, and that the value of the marginal product of labor exceeded the wage for the first 74 employees hired.

We Observe a Profit-Maximizing Firm Hiring Its 75th Employee