Respuesta :
A firm should keep hiring labour till the time the marginal revenue product of labour is more than the wage rate. But stop hiring if the marginal revenue of the product of labour is less than the wage rate.
Units of labour TP MP Price of product MRPL
0 0 - $2.20 -
1 15 15 2 $30
2 28 13 1.80 23.4
3 39 11 1.60 17.6
4 48 9 1.40 12.6
5 55 7 1.20 8.4
6 60 5 1.10 5.5
From the given table, it is clear that till 2 units of labour, the marginal revenue product of labour is more than the wage rate ($20). But after the second labour, the marginal revenue product of labour is less than the wage rate. So the firm will only hire 2 units of labour.
Marginal revenue is the growth in sales that consequences from the sale of one additional unit of output. whilst marginal revenue can stay steady over a sure stage of output, it follows from the law of diminishing returns and will sooner or later gradually down because the output level increases.
Marginal sales are vital as it measures will increase in revenue from promoting extra products and services. Marginal sales follow the regulation of diminishing returns, which states that any increases in manufacturing will bring about a smaller will increase in output.
Learn more about marginal revenue here: brainly.com/question/13617399
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