Will you be replaced by an app?
Under the cost minimization rule, the firm only employs purely labour human labour when the marginal physical product (MPP) of having a machine in place of the human labour is very low. In this sense, it happens when a firm finds it more cost effective to have human labour i.e. the marginal physical product of the worker is higher than the marginal physical product of the machine. When the marginal cost of operating a machine exceeds the marginal revenue product of that same machine, then the firm will automatically utilize only human labour since the marginal cost will be lower and in ...