If the value of marginal product of a factor of production exceeds the price of the factor the
A) firm should hire less of that factor.
B) firm should hire more of that factor.
C) firm is maximising profits.
D) firm should shut down.

Question

Quizplus · Accepted Answer

When the value of the marginal product of a factor of production exceeds the price of the factor, it means the firm can increase its profits by hiring more of that factor, as each additional unit of the factor adds more to revenue than it costs.

If the Value of Marginal Product of a Factor of Production