If the marginal factor cost of hiring an additional worker is $10 while the marginal revenue product is $15, then the firm should

Question

Quizplus · Accepted Answer

When the marginal revenue product is greater than the marginal factor cost, the firm should hire more workers. In this case, the marginal revenue product is $15 while the marginal factor cost is $10, which means that each additional worker will bring in $15 of revenue while costing only $10 to hire. Therefore, hiring more workers would increase the profit of the firm.

If the Marginal Factor Cost of Hiring an Additional Worker