The optimal hiring rule is to employ labor up to the point where:

Question

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The optimal hiring rule for a firm is to employ labor up to the point where the wage (the cost of hiring an additional unit of labor) equals the marginal revenue product (MRP) of labor. The MRP is the additional revenue a firm earns from hiring one more unit of labor, taking into account the marginal product of labor and the marginal revenue from selling the additional output produced by that labor.

The Optimal Hiring Rule Is to Employ Labor Up to the Point