When a firm evaluates the contribution of a worker to its profits, it must first calculate the worker's contribution to revenue. What must the firm subtract from revenue to calculate profit?

Question

Quizplus · Accepted Answer

In order to calculate profit, the firm must subtract all costs, including the worker's wage, from revenue. The worker's average revenue and marginal productivity are both measures of the worker's contribution to revenue, but do not take into account the costs associated with the worker's employment. The worker's output may be a factor in determining revenue, but it does not directly contribute to profit until costs are subtracted.

When a Firm Evaluates the Contribution of a Worker to Its