The firm will hire current labour until
A) profits are maximized.
B) total factor productivity is maximized.
C) the marginal product of labour equals total employment.
D) the marginal product of labour equals the wage rate.
E) the marginal product of labour is less than the real interest rate.

Question

Quizplus · Accepted Answer

The firm will hire workers until the marginal product of labour equals the wage rate, as this indicates that the additional output generated by hiring another worker is equal to the cost of paying that worker. This is the point of profit maximization for the firm.

The Firm Will Hire Current Labour Until