If the wage exceeds the value of the marginal product of labor, then hiring another worker
A)decreases the firm's total revenue.
B)increases the firm's profit.
C)decreases the firm's total cost.
D)decreases the firm's profit.

Question

Quizplus · Accepted Answer

Hiring another worker whose wage exceeds the value of their marginal product of labor means that the cost of hiring that worker is greater than the additional revenue or output they will generate. This will lead to a decrease in the firm's profit as the cost of hiring that worker will be greater than the additional revenue they bring in.

If the Wage Exceeds the Value of the Marginal Product