You are HR director for a growing law firm, which currently has need of writing 24 legal briefs every hour. Each of your company's attorneys can write on average four briefs per hour. You are considering hiring four paralegals to shoulder the load; each paralegal is a bit slower than the attorneys and can write on average only three briefs per hour. Attorneys in your company earn the local occupational median wage of $35.93 per hour, the prospective four paralegals will likely want to get paid their local occupational median wage of $21.84 per hour. Would your company save money in the writing of the 24 legal briefs by hiring the four new paralegals and firing some attorneys?
a. No. The ratio of wages (lawyer wage divided by paralegal wage) is greater than the ratio of marginal products (MPMP lawyers / MPMP paralegals), so the company should prefer to retain lawyers and should not hire the paralegals.
b. No. Since the paralegals are less productive than the attorneys (in terms of writing speed), they would increase the cost per hour of writing. The company should not hire the four paralegals.
c. Yes. The marginal product per dollar for lawyers is less than the MPMP per dollar for paralegals, so the company should hire the paralegals. The total cost of writing 24 legal briefs using only lawyers exceeds the total cost of writing 24 legal briefs using four paralegals and three attorneys.
d. Yes. The hiring of the paralegals increases the marginal product per dollar of lawyers and reduces the MPMP per dollar of paralegals, so the company benefits when the MPMP per dollar of the newly-hired paralegals decreases.