Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
True
B
False
Understanding the Answer
Let's break down why this is correct
Answer
If a firm discovers that the marginal revenue product (MRP) of hiring one more worker is greater than the wage they would pay that worker, it actually means they should hire that worker. The MRP represents the additional revenue generated by that worker, while the wage is the cost of hiring them. For example, if a worker can bring in $100 in revenue but costs the firm $80 in wages, the firm gains an extra $20 in profit by hiring that worker. Therefore, when the MRP exceeds the wage, the benefits of hiring outweigh the costs, making it a smart decision for the firm. This concept is important because it helps businesses maximize their profits by making informed hiring choices.
Detailed Explanation
When the extra money made from hiring a worker is more than their pay, it makes sense to hire them. Other options are incorrect because This answer suggests that hiring is a bad idea when it can actually be good.
Key Concepts
Marginal Revenue Product (MRP)
Wage Determination
Profit Maximization
Topic
Marginal Analysis in Hiring
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.