Thursday, July 14, 2011

A competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8. This?

(d) MRP>w means that the last unit of labor hired produced enough output that it increased revenue more by hiring that unit than it increased cost to do so. As long as the last unit of an activity increases benefit more than it increases cost it's best to increase the level of that activity.

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