If a profit-maximizing firm hires its eleventh worker,then it can be inferred that when the firm hired the first 10 workers,the
A) wage was larger than the value of the marginal product of labor (VMPL).
B) value of the marginal product of labor (VMPL)was larger than the wage.
C) marginal product of labor was increasing.
D) market was becoming less competitive.
E) labor demand curve of this firm was becoming more steep.

Question

Quizplus · Accepted Answer

If a profit-maximizing firm hires its eleventh worker, it means that the marginal product of the eleventh worker is equal to the wage they will pay. Therefore, when the firm hired its first 10 workers, it must have been the case that the value of the marginal product of labor (VMPL) was greater than the wage, otherwise, the firm wouldn't have hired those workers. Therefore, option B is correct. Option A, C, D, and E don't necessarily have to be true in this scenario.

If a Profit-Maximizing Firm Hires Its Eleventh Worker,then It Can