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JAMB Economics 2010 Question 50

Question 50

Labour Market

The amount of labour hired depends on the

  1. A.number of skilled labour available
  2. B.skill of labour
  3. C.marginal productivity of labour
  4. D.price of other inputs.
Show the answer and explanation

Answer: C (marginal productivity of labour)

Explanation

A firm keeps hiring workers as long as each extra worker adds at least as much to revenue as his wage, so hiring depends on labour's marginal productivity.