According to the rule for optimal input usage, a firm should hire a person as lo

Question

According to the rule for optimal input usage, a firm should hire a person as long as her marginal revenue product is greater than her marginal cost to the company.It is well known that many companies management training programs in which new trainees are paid relatively high starting salaries and are not expected to make substantial contributions to the company until after the program is over (programs may run between 6 to 18 months). In offering such training programs, is a company violating the optimality rule?

Explanation / Answer

no firm is not violating the optimality rule. because firm is cosider to give salary to its new trainees at high level because the new trainees ' marginal productivity will be greater than its wages. so firm will enjoy high profit made by these trainees.

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