Let MP = marginal product, P = output price, and W = wage, then the equation that represents a situation where a competitive firm should lay off some workers to maximize profits is

Question

Quizplus · Accepted Answer

According to the profit maximization rule for a competitive firm, they should hire workers up to the point where their marginal revenue product (MRP) is equal to the wage rate (W). In other words, the firm should continue to hire workers as long as their contribution to revenue (MP x P) is greater than their cost (W). 
Therefore, the equation that represents a situation where a competitive firm should lay off some workers to maximize profits is P x MP < W, because this means that the cost of the worker is higher than their contribution to revenue and the firm would maximize profits by laying off some workers.

Let MP = Marginal Product, P = Output Price, and W