EBK LABOR ECONOMICS
7th Edition
ISBN: 9781259291876
Author: BORJAS
Publisher: MCGRAW HILL BOOK COMPANY
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Question
Chapter 3, Problem 1RQ
To determine
Explain the strategy of a firm to maximize his or her profit.
Expert Solution & Answer
Explanation of Solution
A profit maximizing firm will hire the employers at the point where the wage of the labor is equal to the value of marginal product. This is because the marginal product is the
This same idea is used by the firm in his output setting. A firm will set its level of output at the point where output price (MR) equal to its marginal cost.
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