Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $14 and her MRP is $10. On the basis of this information, we can say that
A)profits will be increased by hiring additional workers.
B)profits will be increased by hiring fewer workers.
C)marginal revenue product must exceed average revenue product.
D)the restaurant is maximizing profits.

Question

Quizplus · Accepted Answer

The restaurant is hiring workers at a cost (MRC) that exceeds the additional revenue (MRP) those workers bring in, indicating that reducing the number of workers could increase profits by lowering costs without reducing revenue as much.

Assume That a Restaurant Is Hiring Labor in an Amount