Competitive firms that maximize profit will hire workers until the value of the marginal product of labor

Question

Quizplus · Accepted Answer

Competitive firms that maximize profit will only hire workers until the value of the marginal product of labor (the additional output produced by one additional unit of labor) is equal to the wage paid to that worker. Any additional hiring would result in a decrease in profit, as the cost of the additional worker (their wage) would exceed the additional output they produce. Therefore, the firm will stop hiring once the marginal product of labor equals the wage.

Competitive Firms That Maximize Profit Will Hire Workers Until the Value