Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The marginal product of the new hire must exceed the wage paid.
B
The total number of employees already hired.
C
The historical profit margins of the company.
D
The average productivity of all existing bookkeepers.
Understanding the Answer
Let's break down why this is correct
Answer
When Michelle's accounting company uses marginal analysis, she should look at the benefits and costs of hiring an additional bookkeeper. She needs to consider how much extra work the new bookkeeper can handle and how that will increase the company's overall income. For example, if hiring the bookkeeper costs $3,000 a month, but they can help bring in an extra $5,000 in revenue, the decision makes sense because the benefits outweigh the costs. Michelle should also think about whether the additional workload justifies the hire and if the company can afford it without affecting its current operations. This careful consideration helps ensure that the decision will contribute positively to the company's success.
Detailed Explanation
Michelle should look at how much extra work the new bookkeeper can do. Other options are incorrect because Just counting how many employees are already there doesn't help; Looking at past profits doesn't show what the new hire can do now.
Key Concepts
Marginal Product
Marginal Revenue Product (MRP)
Profit Maximization
Topic
Marginal Analysis in Hiring
Difficulty
easy level question
Cognitive Level
understand
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