A firm will use more and more labor until the marginal revenue product of labor

Question

Quizplus · Accepted Answer

The marginal revenue product of labor (MRPL) is the additional revenue a firm earns by employing one more unit of labor. Firms will continue to hire more labor until the MRPL equals the wage rate, at which point hiring additional labor would not increase profit since the cost of hiring (wage rate) would be equal to the revenue generated by that labor.

A Firm Will Use More and More Labor Until the Marginal