Your boss wants to know if you should lay off any workers.You answer that you should lay off workers if the
A)marginal revenue product of labor is greater than the nominal wage rate.
B)marginal product of labor is greater than or equal to the real wage rate.
C)marginal revenue product of labor is equal to the nominal wage rate.
D)marginal product of labor is less than the real wage rate.

Question

Quizplus · Accepted Answer

The marginal product of labor measures the additional output or revenue generated by adding one more worker. If the marginal product of labor is less than the real wage rate, it means that the cost of employing an additional worker is greater than the additional revenue generated. This suggests that the firm is not using its resources efficiently and should consider laying off some workers to reduce costs.

Your Boss Wants to Know If You Should Lay Off