At which of the following points does each firm employ labour?
- AOption (a)
Each firm employs labour up to the point where the marginal revenue product of labour minus the wage rate.
- BOption (b)
Each firm employs labour up to the point where the marginal revenue product of labour equals the wage rate.
- COption (c)
Each firm employs labour up to the point where the marginal cost of labour equals the wage rate.
- DOption (d)
Each firm employs labour up to the point where the marginal revenue product of labour multiplies the wage rate.
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Correct answer
Each firm employs labour up to the point where the marginal revenue product of labour minus the wage rate.