If the marginal revenue product (MRP)of labor is less than the wage rate,
A)the firm is making profits.
B)the firm is incurring losses.
C)more labor should be employed.
D)less labor should be employed.

Question

Quizplus · Accepted Answer

When the marginal revenue product of labor is less than the wage rate, it means that each additional unit of labor is adding less to the firm's revenue than it costs to employ, suggesting that the firm should employ less labor to increase or maximize profitability.

If the Marginal Revenue Product (MRP)of Labor Is Less Than