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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.