What two factors should you equate in deciding how many workers to employ?
A)The marginal product of labor and the marginal product of capital
B)The marginal product of labor and the real wage rate
C)The marginal product of labor and the real interest rate
D)The marginal product of capital and the real wage rate

Question

Quizplus · Accepted Answer

In deciding how many workers to employ, the two factors that should be equated are the marginal product of labor and the real wage rate. The marginal product of labor reflects the additional output produced by each additional unit of labor, while the real wage rate represents the cost of each unit of labor to the firm. Equating these two factors ensures that a firm is hiring workers up to the point where the additional output produced by each worker is equal to the cost of hiring that worker.

What Two Factors Should You Equate in Deciding How Many