Firms use information on labour's marginal revenue product to determine

Question

Quizplus · Accepted Answer

The marginal revenue product of labor is the additional revenue a firm earns from hiring an additional unit of labor. By using this information, firms can decide how many workers to hire at each wage rate. This means that option B is the correct answer. Option A is incorrect because the marginal revenue product of labor does not provide information on how much to produce at each output price. Option C is incorrect because the marginal revenue product of labor is related to the quantity of labor hired, not the quantity of output produced. Option D is incorrect because the marginal revenue product of labor relates to the firm's demand for labor, not the supply of labor.

Firms Use Information on Labour's Marginal Revenue Product to Determine