In order to maximize profits or minimize losses,a firm facing a perfectly competitive labor market must hire workers until

Question

Quizplus · Accepted Answer

In a perfectly competitive labor market, a firm should hire workers up to the point where the marginal revenue generated by the last worker is equal to the marginal cost of hiring that worker. Thus, the firm should continue to hire workers as long as the additional revenue generated by that worker is greater than the cost of hiring them. Once the marginal revenue generated by the last worker is equal to the marginal cost of hiring that worker, the firm has reached its profit-maximizing level of employment. Therefore, the correct option is B.

In Order to Maximize Profits or Minimize Losses,a Firm Facing