Question

The Pat Summerall School of Diction is employing teachers such that the marginal revenue product of teachers exceeds the wage rate. The school will

Answer 1

hire more teachers.

Step-by-step explanation:

Since the marginal revenue product of teachers is larger than the marginal wage (cost) of teachers, then the number of teachers should increase until the marginal revenue = marginal cost (wage).

Any business, including the Pat Summerall School of Diction, will maximize its profit where the marginal revenue generated by an extra unit of product equals the marginal cost of producing that extra unit of product.