📚 Learning Guide
Marginal Analysis in Hiring
easy

If Michelle's accounting company follows marginal analysis, what should she consider when deciding to hire an additional bookkeeper?

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Learning Path

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Choose 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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