A firm should continue to hire a resource as long as the resource's marginal revenue product exceed the resource's marginal resource cost.

Question

Quizplus · Accepted Answer

This statement is true. It means that as long as the additional revenue generated by a resource is greater than the cost of hiring that resource, the firm should continue to do so. This is because the firm is generating a profit from that resource's contribution to productivity. However, if the marginal revenue product falls below the marginal resource cost, it may be more cost-effective for the firm to stop hiring or let go of that resource.

A Firm Should Continue to Hire a Resource as Long