A profit-maximizing firm will base its decision to hire workers on the additional costs and benefits of each worker.If the extra output that is produced by hiring one more unit of labor adds more to _____ than to _____,the firm will increase its profit by increasing the use of labor.
A)total cost;total revenue
B)total revenue;total cost
C)marginal cost;marginal revenue
D)marginal cost;total cost

Question

Quizplus · Accepted Answer

The firm will increase its profit by hiring more labor if the additional output produced by the extra worker adds more to total revenue than it does to total cost. This is because the firm's profit is maximized when the revenue from selling the extra output exceeds the cost of producing that output.

A Profit-Maximizing Firm Will Base Its Decision to Hire Workers