To maximize profits, a competitive firm will maximize the difference between MRP and the wage rate for the laborers it hires.

Name: To maximize profits, a competitive firm will maximize the difference between MRP and the wage rate for the laborers it hires.
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Question

Quizplus · Accepted Answer

A competitive firm maximizes profits by hiring labor up to the point where the marginal revenue product (MRP) of labor equals the wage rate, not by maximizing the difference between MRP and the wage rate.

To Maximize Profits, a Competitive Firm Will Maximize the Difference