Author Question: Describe the decision for a perfectly competitive employer in determining the profit maximizing ... (Read 40 times)

futuristic · **on:** Jun 30, 2018

Describe the decision for a perfectly competitive employer in determining the profit maximizing quantity of labor to employ.

Question 2

A decrease in gross domestic product (GDP) necessarily means that consumer welfare has decreased.
a. True
b. False
Indicate whether the statement is true or false

jlaineee · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The profit maximizing quantity of labor to employ exists at that quantity where the marginal revenue product of labor (MRP) equals the wage rate (W). The MRP equals the marginal product of labor multiplied by the price of the output produced. This information as well as the wage is required to decide the optimal number of workers to employ. If the MRP > W then employ more workers until they're equal.

Answer to Question 2

False