A profit-maximizing firm will
A)expand employment if marginal revenue product equals marginal resource cost.
B)reduce employment if marginal revenue product equals marginal resource cost.
C)reduce employment if marginal revenue product is less than marginal resource cost.
D)expand employment if marginal revenue product is less than marginal resource cost.

Question

Quizplus · Accepted Answer

A profit-maximizing firm will reduce employment if the marginal revenue product (MRP) is less than the marginal resource cost (MRC) because it indicates that the cost of employing an additional unit of labor is greater than the revenue generated by that unit, leading to decreased profits.

A Profit-Maximizing Firm Will