Employers continue to hire until marginal revenue of the last hire equals their wage rate because as per the first labor market theory assumption:

Question

Quizplus · Accepted Answer

The statement "Employers continue to hire until marginal revenue of the last hire equals their wage rate" is consistent with the assumption that employers seek to maximize profits. This is one of the key assumptions of labor market theory, which helps to explain how supply and demand for labor interact to determine wages and employment levels. The other choices (A, B, and D) are also important assumptions of labor market theory, but they do not directly address the reasoning behind why employers hire up to the point where marginal revenue equals wage rates.

Employers Continue to Hire Until Marginal Revenue of the Last