A profit-maximizing firm will hire workers up to the quantity of labour where: A) VMPL W. B) VMPL = W. C) VMPL

Question

A profit-maximizing firm will hire workers up to the quantity of labour where:
A) VMPL > W.
B) VMPL = W.
C) VMPL < W.
D) MP × MR = VMPL.

Quizplus · Accepted Answer

A profit-maximizing firm will hire workers up to the point where the wage they pay (W) is equal to the value of the marginal product of labour (VMPL). At this point, the firm is getting the most output per unit of cost, meaning that hiring any additional workers would lead to a decrease in profits. Therefore, the correct choice is B, where VMPL = W.

A Profit-Maximizing Firm Will Hire Workers Up to the Quantity