Questions
ECON_002_001_25F Problem Set 2
Single choice
If the real wage exceeds the MPL at the current level of labor, then the firm should
Options
A.hire more workers
B.reduce the number of workers
C.keep labor unchanged
D.raise the wage
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Verified Answer
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Step-by-Step Analysis
Consider the core idea of a profit-maximizing firm in a competitive output market: hire workers up to the point where the value of the marginal product of labor (VMPL) equals the wage.
Option 1: hire more workers. If the real wage were below the MPL, hiring more would increase profits because each additional worker adds more value to o......Login to view full explanationLog in for full answers
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