Which of the following statements is true? A) If MFC_L MRP_L the firm should hire more labor. C) If the MFC_L = MRP_L the firm should hire more labor. D) If MFC_L 0, the firm should shut down.

Question

Which of the following statements is true? A) If MFC_L < MRP_L the firm should hire more labor. B) If the MFC_L > MRP_L the firm should hire more labor. C) If the MFC_L = MRP_L the firm should hire more labor. D) If MFC_L > 0, the firm should shut down.

Quizplus · Accepted Answer

When the Marginal Factor Cost of Labor (MFCL) is less than the Marginal Revenue Product of Labor (MRPL), it means that the cost of hiring an additional unit of labor is less than the revenue that the additional unit of labor would generate. Therefore, it would be profitable for the firm to hire more labor.

Which of the Following Statements Is True