For maximum profit, a firm hires labor up to the point at which the wage equals

Question

Quizplus · Accepted Answer

Option (i) states that a firm hires labor up to the point where the marginal cost of labor (MCL) equals the marginal revenue product of labor (MRPL). This condition ensures that the additional unit of labor hired adds to the firm's revenue by an amount equal to the wage rate paid to the worker. 
Option (iii) states that a firm hires labor up to the point where the marginal product of labor (MPL) equals the wage rate. This condition ensures that the additional worker hired will add an amount of output equal to the wage rate paid, ensuring that hiring the worker is worthwhile.
Option (ii) states that a firm hires labor up to the point where the marginal revenue product of labor equals the wage rate. This condition ensures that the value of the additional output generated by hiring the worker is equal to the wage rate paid, ensuring that hiring the worker is profitable.
Options (i) and (iii) combined imply the condition in option (ii) which leads to maximum profit. Hence, the correct answer is B, (i) and (iii) only.

For Maximum Profit, a Firm Hires Labor Up to the Point