Competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8.?

Question

This firm:

a. should hire more labor because this will increase profits

b. is selling its product in an imperfectly competitive market

c. is currently hiring the profit-maximizing amount of labor.

d. shoudl hire more labor, although this may either increase or decrease profits.

Answer 1

a. should hire more labor because this will increase profits

The firm is maximizing profits when MRP is equal to the wage rate.  To get the MRP down to 8, they have to hire more workers.