Table 5.1 Two-Period Training Model

-A profit-maximizing firm which wants to train its workers during the first period CANNOT (see Table 5.1 for definitions of abbreviations)

Question

Table 5.1 Two-Period Training Model
 
-A profit-maximizing firm which wants to train its workers during the first period CANNOT (see Table 5.1 for definitions of abbreviations)

Quizplus · Accepted Answer

A profit-maximizing firm cannot allow the wage in the first period (W1) to be greater than the marginal product of labor (MPl) because it would mean paying workers more than the value they add, which is not optimal for maximizing profits.