passwella.
Menu

JAMB Economics 1999 Question 29

Question 29

Labour Market

An entrepreneur will continue to employ labour up to a point where

  1. A.costs are minimized
  2. B.maximum efficiency is attained
  3. C.wages are equal to marginal product of labour
  4. D.marginal product of labour is equal to zero.
Show the answer and explanation

Answer: C (wages are equal to marginal product of labour)

Explanation

Hiring one more worker adds to profit while his extra output is worth more than his wage, so the firm stops where the wage equals the marginal product of labour.