If a firm's marginal revenue product of labor is greater than the wage paid to labor, it indicates that reallocating resources towards labor will always increase overall profit, regardless of the marginal revenue product of capital.

When a firm's marginal revenue product of labor is higher than the wage it pays to workers, it means that each additional worker is bringing in more money than they cost. This situation suggests that the company can make more profit by hiring more workers because the value generated by their work exceeds their salary. For example, if a worker produces goods worth $100 but is paid only $70, the firm gains an extra $30 in profit from that worker. However, it is important to remember that this principle focuses only on labor and does not guarantee that reallocating resources from capital to labor will always be beneficial, as the effectiveness of capital also plays a role in overall productivity. Therefore, while hiring more labor seems profitable at first glance, a balanced approach considering both labor and capital is essential for maximizing profits.