At what point should a firm stop hiring workers?
A) when the wage per worker starts to increase
B) when the price of capital starts to decrease
C) when the firm's marginal gain in output from hiring an additional worker is zero
D) when the firm's marginal profit from hiring an additional worker equals the cost of hiring that worker
E) when the firm's value of marginal product equals zero

Question

Quizplus · Accepted Answer

A firm should stop hiring workers when the marginal profit from hiring an additional worker equals the cost of hiring that worker. This ensures that the firm is maximizing its profit by not spending more on labor than the value generated by that labor.

At What Point Should a Firm Stop Hiring Workers