In the benchmark competitive case, the firm will expand the hiring of employees until the marginal revenue product is:
A) less than the market wage rate.
B) equal to the market wage rate.
C) greater than the market wage rate.
D) the universe of the market wage rate.

Question

Quizplus · Accepted Answer

The firm will expand the hiring of employees until the marginal revenue product (MRP) is equal to the market wage rate (MWR). This is because the MRP represents the additional revenue generated by hiring an additional employee, and the firm will continue to hire as long as the additional revenue generated by each new employee is greater than or equal to the cost of hiring them (the MWR). Once the MRP falls below the MWR, the firm will not hire any more employees because they would be generating less revenue than they cost to employ. Therefore, the best choice is B.

In the Benchmark Competitive Case, the Firm Will Expand the Hiring