A firm will find it profitable to hire workers up to the point at which their
A) marginal resource cost equals their wage rate.
B) wage rate equals product price.
C) MP is equal to their MRP.
D) marginal resource cost is equal to their MRP.

Question

Quizplus · Accepted Answer

The firm will hire workers up to the point where their MRP (marginal revenue product) is equal to their marginal resource cost (MRC). This is because the firm wants to maximize its profits and if it hires more workers beyond this point, the cost of hiring an extra worker (MRC) will exceed the benefit that the worker brings in (MRP). Therefore, the correct option here is D, where the firm will stop hiring workers once the MRC is equal to the MRP.

A Firm Will Find It Profitable to Hire Workers Up