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If the MPP of Labor Is Positive, the Total Revenue

Question 28

Multiple Choice

If the MPP of labor is positive, the total revenue will grow with each additional worker hired. Yet firms stop hiring before MPP reaches zero because


A) the firm's physical capacity (factory) is limited, that is, the firm's ability to hire is limited by space
B) there isn't a sufficient supply of workers at the wage rate paid by the firm
C) the wage rate would have to increase, which reduces MPP
D) they maximize their gains from hiring at MRP = wage rate and that does not occur at MPP = zero
E) marginal revenue product will become negative before MPP does

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