In making employment decisions, profits are maximized

Question

Quizplus · Accepted Answer

Profits are maximized at the level of employment where the marginal product of labor equals the real wage rate. This is because the real wage rate reflects the cost of labor in terms of goods and services, and when the additional output produced by the last worker hired (marginal product) equals the cost of hiring that worker in real terms, the firm is making the most efficient use of its labor resources.

In Making Employment Decisions, Profits Are Maximized