To maximize profits, a firm will employ workers up to the point at which for the last worker employed:
A)marginal product is equal to the nominal wage rate.
B)the value of the marginal product is equal to the wage rate.
C)the value of the marginal product is equal to the price per unit of output.
D)the value of the marginal product is as high as possible.

Question

Quizplus · Accepted Answer

The firm maximizes profits by hiring workers up to the point where the value of the marginal product is equal to the wage rate. This ensures that the cost of employing an additional worker (the wage) is equal to the additional revenue generated by that worker (the marginal product). This maximizes the firm's profits.

To Maximize Profits, a Firm Will Employ Workers Up to the Point