Suppose at the current level of labor used, MRP = $100 and MFC = $150. To maximize profits, the firm should

Question

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If MFC is higher than MRP, then the firm is incurring a loss on the last unit of labor hired. Therefore, to maximize profits, the firm should reduce the level of labor until MRP is equal to MFC (or MRP is slightly greater than MFC, to account for other costs such as fixed costs). In this case, since MFC is greater than MRP, the firm should reduce the level of labor.

Suppose at the Current Level of Labor Used, MRP =