Question on: JAMB Economics - 2024
Under perfect competition, a profit maximizing firm will hire labour up to the point where the last unit of labor adds
A
less to TR as to TC
B
as much to TR as to TC
C
more to TC than to TR
D
less to TC than to TR
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Correct Option: D
A profit-maximizing firm hires labour up to the point where the marginal revenue product (MRP) of labour equals the wage rate.
The MRP represents the additional revenue generated by one more unit of labour. The firm will keep hiring as long as the addition to total revenue (TR) equals the addition to total cost (TC).
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