Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily.
-Refer to Figure 18-5. The firm would choose to hire three workers if
A)the market wage for a day's work is $220.
B)the market wage for a day's work is $260.
C)the output price is $220.
D)the output price is $260.

Question

Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily. 
-Refer to Figure 18-5. The firm would choose to hire three workers if
A)the market wage for a day's work is $220. 
B)the market wage for a day's work is $260. 
C)the output price is $220. 
D)the output price is $260.

Quizplus · Accepted Answer

The firm would hire workers until the marginal revenue product (MRP) of labor equals the wage. If the market wage is $220, the firm would hire three workers if the MRP of the third worker is at least $220.

Figure 18-5 The Figure Shows a Particular Profit-Maximizing, Competitive Firm's Value-Of-Marginal-Product (VMP)