Which of the following statements is true? A) If MFCL MRPL the firm should hire more labor. C) If the MFCL = MRPL the firm should hire more labor. D) If MFCL 0, the firm should shut down.

Question

Which of the following statements is true?
A) If MFCL < MRPL the firm should hire more labor.
B) If the MFCL > MRPL the firm should hire more labor.
C) If the MFCL = MRPL the firm should hire more labor.
D) If MFCL > 0, the firm should shut down.

Quizplus · Accepted Answer

If MFCL < MRPL, it means that the marginal revenue product of labor (MRPL) is greater than the marginal factor cost of labor (MFCL). This indicates that the firm can hire more labor at a lower cost than the additional revenue they will generate, which will result in an increase in profits. Therefore, the firm should hire more labor.

Which of the Following Statements Is True