Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Hire the worker to increase overall output
B
Not hire the worker to reduce costs
C
Hire the worker only if their productivity is guaranteed
D
Wait for a better opportunity to hire
Understanding the Answer
Let's break down why this is correct
Answer
If the marginal product of labor is greater than the wage paid to the worker, the company should hire that worker. The marginal product of labor is the additional output produced by hiring one more worker. If this extra output is worth more than the cost of paying the worker, it means the company would gain more from the worker than it spends on them. For example, if hiring a worker increases production value by $100, but the worker's wage is only $80, the company benefits by $20. Therefore, hiring the worker would be a smart decision for the company to increase its profits.
Detailed Explanation
If the extra worker can produce more value than what they cost, the company will make more money. Other options are incorrect because Thinking that saving money is always best can be misleading; Believing that productivity is guaranteed is a mistake.
Key Concepts
Marginal Product of Labor
Wage Determination
Resource Allocation
Topic
Marginal Product Analysis
Difficulty
easy level question
Cognitive Level
understand
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