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Consider a production function that only uses labor as its variable input, and all other inputs are fixed. Within this procution, it is optimal to hire labor units in the short run as long as:______.
1) value marginal product of labor is greater than wage.
2) marginal product of labor is less than product price.
3) average product of labor is greater than wage.
4) value marginal product of labor is less than product price.

Respuesta :

Answer:

1) value marginal product of labor is greater than wage.

Explanation:

In the case when the labor is considered to be the variable input while the other inputs are considered to be fixed

So, the equation would be

VMPL = MPL x Output price

where,

VMPL = Function of labor demand

And, in the short run, the hiring is the optimum as bigger as VMPL as it is more than or equivalent to the wage rate

Therefore the correct option is 1.

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