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5 October, 10:22

Explain how a firm values the contribution of workers to its profitability. would a profit-maximizing competitive firm ever stop increasing employment as long as marginal product is rising? explain your answer.

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  1. 5 October, 10:32
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    1. Firms value the contribution of their workers to the profitability of the company by evaluating the individual contribution of each worker to the company's revenue. This is calculated by multiplying each worker's marginal product by the output price received for his production.

    2. A profit maximizing competitive firm will continue to hire more workers as long as its marginal product is rising. When the marginal product of a company is rising, hiring additional employees will increase the value that each worker contributes to the company while cost is kept constant.
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