Under perfect competition, a profit maximizing firm will hire labour up to the point where the last unit of labor adds

Under perfect competition, a profit maximizing firm will hire labour up to the point where the last unit of labor adds

  1. as much to TR as to TC
  2. less to TR as to TC
  3. less to TC than to TR ✓
  4. more to TC than to TR

Explanation

A profit-maximizing firm hires workers until the last one adds more to revenue than to cost. This maximizes profit.

If a worker adds less to revenue than to cost, hiring them reduces profit. Stop hiring before that point.

Keep hiring as long as each new worker brings in more money than they cost.