<p>$W$ = Wage</p>

<p>$VMP$ =Value of Marginal Product</p>

<p>When $W/VMP$ &lt;1, workers generate more value than they cost to pay. Hire more workers.</p>

<p>When $W/VMP$ >1, workers generate less value than they cost to pay. Hire less workers.</p>

<p>Therefore when $W/MVP$ = 1 you are purchasing your optimal amount of labour.</p>

CC BY-SA 3.0
2016-12-02T19:43:41.820Z
2016-12-02T20:13:08.613Z
2016-12-02T20:13:08.613Z
Lee Sin
<p>W/Vmp = ? I think it is the marginal product....but I have really no clue....any help on this? </p>

CC BY-SA 3.0
2016-12-02T19:14:36.720Z
Are you sure this isn't W=Vmp? W/Vmp should equal 1...
Lee Sin
CC BY-SA 3.0
2016-12-02T19:23:51.893Z
I dont know man, I really dont....
Bak1139
CC BY-SA 3.0
2016-12-02T19:39:18.217Z
Is this a homework question where they're asking you to figure out what W/Vmp equals?
Lee Sin
CC BY-SA 3.0
2016-12-02T21:55:46.627Z
Why on Earth would you want to know the meaning of a formula without knowing anything about the context?
Giskard
<microeconomics>
What does this formula stand for?
Bak1139
# What does this formula stand for?

(Asked by: username_0 on 2016-12-02)

W/Vmp = ? I think it is the marginal product....but I have really no clue....any help on this?

**Tags:** microeconomics
> **Comments:**
> **username_1**: Are you sure this isn't W=Vmp? W/Vmp should equal 1...  
> **username_0**: I dont know man, I really dont....  
> **username_1**: Is this a homework question where they're asking you to figure out what W/Vmp equals?  
> **username_2**: Why on Earth would you want to know the meaning of a formula without knowing anything about the context?  

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## 1 answers

### Answer by username_1 on 2016-12-02. Score: 1

$W$ = Wage

$VMP$ =Value of Marginal Product

When $W/VMP$ <1, workers generate more value than they cost to pay. Hire more workers.

When $W/VMP$ >1, workers generate less value than they cost to pay. Hire less workers.

Therefore when $W/MVP$ = 1 you are purchasing your optimal amount of labour.


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