A firm will hire additional units of any input up to the point where
A)the marginal productivity of the input is maximized.
B)the marginal cost of employing the input is minimized.
C)the expense of employing the last unit is equal to the revenue brought in by the last unit.
D)the revenue brought in by the input is maximized.

Question

Quizplus · Accepted Answer

The firm will continue to hire additional units of any input up to the point where the expense of employing the last unit (marginal cost) is equal to the revenue brought in by the last unit (marginal revenue). This is because at this point, the firm maximizes its profit by ensuring that the cost of adding one more unit of input equals the additional income generated from that input, aligning with the principle of marginal analysis.

A Firm Will Hire Additional Units of Any Input Up