Translate every hiring number into a unit

Units reveal whether a value belongs in the hiring rule.

Marginal product is units of output per additional worker. Marginal revenue is dollars per additional unit of output. Multiplying them produces dollars per additional worker, which can be compared with marginal resource cost in dollars per worker. Total product, total revenue, or average revenue per worker cannot replace MRP simply because each mentions output or money.

If the sixth worker adds 12 units and each extra unit adds $7 to revenue, MRP is $84. At an $80 competitive wage, the worker should be hired. At $90, the worker should not. The comparison applies to the marginal worker, not to the average productivity of the whole workforce. Earlier workers may have much larger MRP, which is why a downward-sloping labor-demand schedule can coexist with hiring several workers at one wage.

Do not stop at physical productivity

A worker with high marginal product can have low MRP if the added output has little marginal revenue. Hiring depends on the revenue value of output, not physical output alone.

A dimensional audit often reveals the correct hiring value before any economic terminology does. Total product is output units. MP is output per worker. Product price or MR is dollars per output unit. MRP is dollars per worker. The wage or MRC is also dollars per worker. Only the final two are directly comparable.

Suppose the seventh worker raises output from 140 to 151. MP is 11. If price is $9 in competition, MRP is $99. If the wage is $94, hire. If it is $104, do not. Dividing total revenue by seven gives average revenue product per worker, which can look plausible but does not value the seventh worker.

If output changes by more than one worker, divide by the worker change. Output rising from 200 with 10 workers to 236 with 13 gives average MP of 12 per worker across the interval. Without the missing rows, the separate eleventh, twelfth, and thirteenth MPs cannot be recovered.

Reject values with the wrong dimension

A table reports MP of 8 units per worker, product MR of $6 per unit, total revenue of $480, and wage of $52 per worker. The hiring comparison is 8 units per worker × $6 per unit = $48 per worker versus a $52-per-worker wage. Total revenue cannot be compared with one worker’s wage, and MP cannot be compared with dollars.

For imperfect product competition, an option using price can carry the correct dollar-per-worker unit but still be economically wrong. Units are necessary, not sufficient. After the dimensional check, verify whether the product market makes MR=P.

The same discipline applies to capital or land. Replace “worker” with the input unit: marginal revenue product remains dollars per added input, and MRC remains the added dollar cost of obtaining it. The hiring rule is a general factor-use rule.

End every calculation with a sentence: “The worker adds $48 to revenue and $52 to cost, so employment should not expand.” A number without the decision is incomplete preparation for a five-choice question.