The change in a firm's revenue as a result of hiring one more worker
A)is the definition of the marginal product of labour.
B)is equal to the firm's marginal cost.
C)is the definition of the marginal revenue product of labour.
D)will be negative if the demand for the firm's output is inelastic.

Question

Quizplus · Accepted Answer

The change in a firm's revenue as a result of hiring one more worker is known as the marginal revenue product of labour. It is not the same as the marginal product of labour, which is the additional output produced by hiring one more worker. Marginal cost is the cost of producing one more unit of output, and it is not directly related to the change in revenue from hiring an additional worker. The elasticity of demand for the firm's output may affect the magnitude of the change in revenue, but it does not determine whether the change in revenue will be negative or positive.

The Change in a Firm's Revenue as a Result of Hiring