A company hires an additional worker who generates a marginal revenue of $500 and incurs a marginal cost of $300. How should the company classify the impact of this decision on its profitability?

When a company hires an additional worker, it looks at how much extra money the worker can bring in, called marginal revenue, and how much it costs to hire that worker, known as marginal cost. In this case, the worker brings in $500 but costs the company $300. To see if this decision is good for profitability, the company compares these two numbers. Since the marginal revenue of $500 is greater than the marginal cost of $300, the company makes an extra profit of $200 from hiring this worker. Therefore, this decision should be classified as beneficial for the company’s profitability.