Value of marginal productivity


Suppose a firm employs 10 workers and pays each $15 per hour. Further suppose that the MP of the 10th worker is 5 unit of output and that the price of the output is $4. In the short run should the firm

a. hire additional workers

b. reduced the amount of workers employed

c. continue to employ 10 workers

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Microeconomics: Value of marginal productivity
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