According to the marginal decision rule, what two values must a firm compare when deciding whether to hire an additional worker, and at what point should it stop hiring additional labor?

### The concept The hiring rule requires two comparable values: the additional income from one more worker and the wage paid to that worker. The manager compares them rather than relying only on the worker's output or the firm's total revenue. A higher marginal value product supports hiring; a lower one means the wage exceeds the value added; equality identifies the stopping point. ### What a good answer covers - Identifies the additional income estimate. - Identifies the wage as labor's cost. - States the correct decision for greater-than and less-than cases. - Identifies equality as the stopping condition. ### Terms - **Marginal decision rule**: A method that compares the added benefit and added cost of one more unit. ### Remember For an additional worker, compare that worker's added income with that worker's wage.