If the MRP of labor were $50 and the wage rate were $100,

A) exactly the right amount of labor is being used.
B) not enough labor is being used.
C) only half as much labor is being used as should be used.
D) too much labor is being used.

Question

Sacoya Brooks · Accepted Answer

Final Answer : D, Explanation :  When the marginal revenue product (MRP) of labor is less than the wage rate, it indicates that the cost of hiring an additional unit of labor (in this case, $100) is more than the additional revenue that the labor would bring in ($50). This suggests that too much labor is being used, as each additional unit of labor is not adding enough value to cover its cost.

If the MRP of labor were $50 and the wage rate were $100,

A) exactly the right amount of labor is being used.
B) not enough labor is being used.
C) only half as much labor is being used as should be used.
D) too much labor is being used.

Definitions

Learning Objectives

Learning Objectives

Related questions

If the MRP of labor were $50 and the wage rate were $100,A) exactly the right amount of labor is being used.B) not enough labor is being used.C) only half as much labor is being used as should be used.D) too much labor is being used.

Definitions

Learning Objectives

Learning Objectives

Related questions

If the MRP of labor were $50 and the wage rate were $100,

A) exactly the right amount of labor is being used.
B) not enough labor is being used.
C) only half as much labor is being used as should be used.
D) too much labor is being used.