The general rule governing the hiring of workers is to

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Equating marginal labor costs to marginal labor benefits ensures that the firm is hiring workers until the point where the last worker hired adds as much value to production as their wage cost. This way, the firm is maximizing its profits and productivity. Minimizing average labor costs or equating total labor costs to benefits may not necessarily result in optimal hiring decisions as they do not take into account the productivity of each worker. Maximizing marginal product of labor may result in overhiring, which would increase overall labor costs and decrease productivity.

The General Rule Governing the Hiring of Workers Is to