If the wage that a competitive firm must pay its workers exceeds their value of marginal product, the firm will
A) lower the price of the good.
B) raise the price of the good.
C) decrease the quantity of labour it employs.
D) increase the quantity of labour it employs.

Question

Quizplus · Accepted Answer

When the wage exceeds the value of marginal product, it means the cost of employing an additional worker is greater than the revenue generated by that worker. To minimize losses, the firm will decrease the quantity of labor it employs.

If the Wage That a Competitive Firm Must Pay Its