How much labour will a competitive, profit-maximising firm hire?

Question

Quizplus · Accepted Answer

A profit-maximising firm will continue to hire labour until the value of the marginal product (VMP) is equal to the wage paid to the worker. This is because the VMP represents the additional revenue generated by each additional unit of labour hired, and the firm will continue to hire workers as long as the additional revenue they generate is greater than the cost of hiring them (i.e. their wage). Therefore, choice C is the best answer.

How Much Labour Will a Competitive, Profit-Maximising Firm Hire