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Profit Maximization

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A profit-maximizing firm operating in perfectly competitive output and input markets will be using the optimal amount of an input at the point at which the monetary value of the input's marginal product is equal to the additional cost of using that input - in other words, when MRP=MLC."

Based on the theory above, please explain in detail why the average CEO earns a lot more than the average worker? Is this wage differentials a natural outcome of a market economy?

If you are a CEO or human resource manager, you can compensate your employees high salaries/wages for their work and still maximize your firm's profit if their MRPs are high as well. What are the feasible and economical ways to improve their productivity (or MRP) at work?

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MRP = MLC condition applies for CEO's as well as ordinary workers in any firm. However, a CEO's productivity (or MRP) is much higher than that of an ordinary worker in the form, as the CEO negotiates business deals and spends huge amount of time and ...

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