Managerial Economicsbasic
If marginal value product is less than the wage, the marginal decision rule recommends hiring the additional worker.
Answer
false
Explanation
### Why this is right
When marginal value product is below the wage, the additional worker costs more than the income generated by that worker. The rule therefore does not recommend hiring on this comparison.
### The concept
The manager compares the additional benefit of labor with its additional cost. Hiring is favored when marginal value product exceeds the wage, and the stopping condition is equality.
### The other options
- **The statement is false**: It reverses the decision rule for a worker whose added value is below the wage.
### Remember
If the added value is below the added cost, do not add that unit of the resource.
Related Questions
- Which description best defines managerial economics?(basic)
- Under the SMARTTS framework, an objective with a stated deadline is _____.(basic)
- An increase in income always moves a consumer to a different point on the same demand curve.(intermediate)
- A price above equilibrium creates excess demand and tends to push price upward.(basic)
- What does a production function represent?(basic)
Want to practice more questions like this?
Join myBenkio free and practice past questions for your Nigerian university courses with AI explanations for every answer.
Start Practicing Free