If one observes a profit-maximising firm decreasing employment, it is possible to infer that the:

Question

Quizplus · Accepted Answer

If a profit-maximising firm is decreasing employment, it suggests that the cost of labour (wages) is higher than the value created by the marginal product of the worker. Thus, continuing to employ the worker would result in a decrease in profits. Therefore, this choice is the best answer. B and C are not necessarily true, and D is the opposite of the correct answer.

If One Observes a Profit-Maximising Firm Decreasing Employment, It Is