According to the marginal productivity theory of resource demand, the labor-demand schedule for a producer selling in a purely competitive market is
A)the same as the marginal resource cost schedule.
B)the same as the marginal productivity schedule.
C)the same as the marginal revenue product schedule.
D)independent of the value of the product being produced.

Question

Quizplus · Accepted Answer

The labor-demand schedule according to the marginal productivity theory of resource demand is the same as the marginal revenue product schedule. This is because a firm will hire additional units of labor as long as the revenue generated by that additional unit of labor (marginal revenue product) exceeds the cost of hiring the labor (marginal resource cost).

According to the Marginal Productivity Theory of Resource Demand, the Labor-Demand