Explain how a firm values the contribution of workers to its profitability. Would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? Explain your answer
A firm values the contribution of a worker by evaluating the worker's individual contribution to firm revenue. This is done by multiplying the worker's marginal product by the output price received for his production. A profit-maximizing firm would never choose to operate where marginal product is rising because hiring an additional worker would increase the "value" a worker contributes to the firm and cost would remain constant. As such, value and cost diverge as long a marginal product is increasing, and it is always more profitable to continue to hire more workers.
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A recent study has revealed that the consumption of coffee is injurious to health. This led to a sharp decline in coffee consumption worldwide. If coffee production accounts for 40% of Richland's GDP, this will lead to a(n)________
A) rise in Richland's inflation rate B) increase in the real interest rate in Richland C) rise in Richland's demand for labor D) fall in Richland's demand for labor
Ann Marie is a Tea-Party Republican, but she decides to vote in the Democratic primary in order to vote against the most liberal candidate. This is an example of strategic voting
Indicate whether the statement is true or false