Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 14 - The Demand for Resources - Discussion Questions: 2

Answer

The answer is below.

Work Step by Step

Like with products, with labor, companies will keep adding employees as long as marginal revenue exceeds marginal cost. Cutting employees suggests that the company thought they went too far, meaning that marginal cost was exceeding marginal revenue.
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