A competitive, profit-maximising firm hires workers until:

Question

Quizplus · Accepted Answer

A profit-maximising firm will hire workers until the value of the marginal product (the additional output produced by adding one more worker) equals the wage paid to that worker. This is because the firm wants to continue hiring workers as long as each additional worker contributes more to output than they cost in wages. Once the value of the marginal product falls below the wage, it is no longer profitable to hire another worker. Therefore, choice B - "the value of the marginal product equals the wage" is the correct answer.

A Competitive, Profit-Maximising Firm Hires Workers Until