Until what point does a profit-driven company continue to employ labor?

Show Answers

when marginal revenue equals marginal costwhen long-run marginal revenue matches long-run marginal costwhen the ratio of labor output equals the ratio of capital outputwhen the cost of hiring an additional worker equals the additional revenue generated by that worker

Explanation

A profit-maximizing firm will keep hiring labor as long as the cost of employing one more worker (marginal cost of labor) is less than or equal to the extra revenue that worker produces (marginal revenue product). When these two are equal, the firm maximizes profit.