Your boss wants to know if you should lay off any workers.You answer that you should lay off workers if the
A)marginal revenue product of labour is greater than the nominal wage rate.
B)marginal product of labour is greater than or equal to the real wage rate.
C)marginal revenue product of labour is equal to the nominal wage rate.
D)marginal product of labour is less than the real wage rate.

Question

Quizplus · Accepted Answer

The decision to lay off workers should be based on the marginal product of labor (MPL) and the real wage rate. If MPL is less than the real wage rate, then the additional cost of keeping the worker is not justified by the extra output produced, making it economically inefficient to keep the worker. Therefore, option D is the best choice. The other options don't reflect the basic economic principles and would lead to inefficient decision-making.

Your Boss Wants to Know If You Should Lay Off