The idea that rational employers think at the margin is central to understanding how many units of labour they choose to employ.

Question

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Rational employers will determine the optimal quantity of labor to employ by considering the additional benefit or cost of hiring one more unit of labor at the margin. This means they compare the additional revenue generated by an extra worker to the additional cost of hiring that worker, including wages and benefits. Therefore, thinking at the margin is central to their decision-making process.

The Idea That Rational Employers Think at the Margin Is