If the value of the marginal product of labor is less than the wage, then the firm could
A)increase profit by hiring additional labor.
B)increase profit by reducing the amount of labor hired.
C)increase revenue by lowering output.
D)reduce total cost by hiring additional workers.

Question

Quizplus · Accepted Answer

If the value of the marginal product of labor is less than the wage, it means that each additional worker hired is adding less value to the firm than their cost. In this case, hiring additional labor would decrease profit margins. Therefore, the best choice for the firm would be to reduce the amount of labor hired, as this would decrease labor costs and increase profit margins.

If the Value of the Marginal Product of Labor Is