Question #64009

Even if workers would work for free, a profit maximizing firm would not hire more than units of labor.
a. 3 b. 4 c. 5 d. 6
Kindly tell which is right answer and why

Expert's answer

Theory states that a profit maximizing firm will hire workers up to the point where the marginal revenue product is equal to the wage rate, because it is not efficient for a firm to pay its workers more than it will earn in revenues from their labor.

Therefore the firm is interested in hiring minimal amount of workers.

a. 3

Event is they work for free, minimal number of workers means less costs for working and safety clothes, insurance liabilities etc.

Therefore the firm is interested in hiring minimal amount of workers.

a. 3

Event is they work for free, minimal number of workers means less costs for working and safety clothes, insurance liabilities etc.

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