Asked by
elvira magerramova
on Nov 06, 2024
Verified
Labor is a firm's only variable input. The firm should hire additional units of labor as long as the wage is less than or equal to the marginal revenue product of that additional unit of labor.
Marginal Revenue Product
The extra income earned by utilizing an additional unit of a production resource, while keeping all other resources unchanged.
Variable Input
Resources or inputs in production that change in quantity depending on the level of output, such as raw materials and direct labor hours.
- Grasp the economic rationale behind hiring or using more or less of a factor of production based on its MRP versus its cost.
Verified Answer
TZ
Learning Objectives
- Grasp the economic rationale behind hiring or using more or less of a factor of production based on its MRP versus its cost.