An employer hiring in a competitive labor market should hire additional labor as long as
A)the MRP exceeds the wage rate.
B)the wage rate is less than MP.
C)average product exceeds MP.
D)MC exceeds MR.

Question

Quizplus · Accepted Answer

The employer should continue to hire additional labor as long as the marginal revenue product (MRP) of labor exceeds the wage rate. This is because the firm is increasing its profit by hiring additional labor up to the point where the cost of hiring one more unit of labor (wage rate) equals the additional revenue generated by that unit of labor (MRP).

An Employer Hiring in a Competitive Labor Market Should Hire