A profit-maximizing firm which wants to provide firm-specific training to its workers will pay ________ in the training period and ________ after training is completed.
A) the market wage for single period jobs; the market wage for single period jobs
B) more than the market wage for single period jobs; more than the market wage for single period jobs
C) less than the market wage for single period jobs; less than the post-training marginal revenue product
D) more than the worker's marginal revenue product in other jobs; more than the worker's marginal revenue product in other jobs

Question

Quizplus · Accepted Answer

In the training period, a profit-maximizing firm will pay less than the market wage for single period jobs because the firm is incurring costs for providing the training. After training is completed, the firm will pay less than the post-training marginal revenue product to ensure it captures some of the returns on its investment in training.

A Profit-Maximizing Firm Which Wants to Provide Firm-Specific Training to Its