
FIGURE 13.1 Samsung’s Labor Hiring Decision
Given market wage
W, a firm optimally hires the quantity of labor
l*, where
MRPL =
W. If Samsung hired less labor than
l* so that
MRPL >
W, it could increase its profits by hiring more because the firm’s benefit from that labor (
MRPL) would be greater than its cost (
W). If, on the other hand, Samsung hired more labor than
l*, it would be paying for labor with a benefit less than its cost, and could do better by reducing hiring. Only when
MRPL =
W can Samsung do no better.