Competitive firms that maximize profits will hire workers until the value of the marginal product of labor

Question

Quizplus · Accepted Answer

Competitive firms will continue to hire workers until the additional output produced by each additional worker, known as the marginal product of labor, equals the wage paid to each worker. At this point, the cost of hiring an additional worker will be equal to the additional revenue generated by that worker, maximizing the firm's profits. If the marginal product of labor is less than the wage, the cost of hiring an additional worker would be greater than the additional revenue generated, resulting in lower profits for the firm.

Competitive Firms That Maximize Profits Will Hire Workers Until the Value