When Deciding Whether to Hire an Additional Worker, Firms Need

question 516

Multiple Choice

When deciding whether to hire an additional worker, firms need only consider how the additional worker would affect

• A)costs.
• B)revenues.
• C)output.
• D)profit.

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Definitions:

Cost per Unit

The total cost associated with producing one unit of a product, including both fixed and variable costs.

Variable Costs

Expenses that change in proportion to the level of production or business activity, including costs such as materials and direct labor.

Fixed Costs

Fixed outgoings that are unaffected by variations in output or sales volume, including rental fees, payroll, and insurance coverages.

Indirect Cost

Expenses not directly linked to a specific product or service but necessary for the overall operations of a business, such as utilities and executive salaries.