If at a firm's current level of employment the marginal revenue product of the last worker employed is less than the marginal cost of labor,the firm should

Question

Quizplus · Accepted Answer

If the marginal revenue product is less than the marginal cost of labor, it means the firm is incurring a loss by employing the last worker. Therefore, it makes sense to decrease employment to reduce costs and minimize losses. Providing more on-the-job training or maintaining existing employment levels will not address the issue of a negative marginal cost situation. Increasing employment will only exacerbate the loss.

If at a Firm's Current Level of Employment the Marginal