The profit-maximising employment rule for a competitive firm ensures that:

Question

Quizplus · Accepted Answer

The profit-maximising employment rule for a competitive firm states that the firm will hire workers up to the point where the marginal revenue product (the additional revenue generated by each additional worker) is equal to their wage rate. This ensures that the firm is producing at the point where output price (which is equal to marginal revenue) equals marginal cost, which in turn maximises profits. Therefore, the correct answer is A.

The Profit-Maximising Employment Rule for a Competitive Firm Ensures That