If the firm is using only one variable input, explain why the condition W = MRPL is thesame condition as P = MC
What will be an ideal response?
In both cases, the firm compares costs with potential revenues. As long as the wage equals the marginal revenue product of labor, the additional revenue just covers the additional costs of hiring labor and the firm is maximizing profits. By producing where price equals marginal cost, the firm is producing up to the point where additional costs equal additional revenues.
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Suppose you have a money income of $10 all of which you spend on Coke and popcorn. In the above diagram, the prices of Coke and popcorn respectively are:
A) $.50 and $1.00. B) $1.00 and $.50. C) $1.00 and $2.00. D) $.40 and $.50.
Unions tend to: a. shift labor from the union sector to the non-union sector of the economy. b. shift labor from the non-union sector to the union sector of the economy. c. decrease wages in the union sector
d. increase wages in the non-union sector.