Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 21

Recently, some college alumni started a moving service for students living on campus. They have three employees and are debating hiring a fourth. The hourly wage for an employee is $18 per hour. An average moving job takes three hours. The company currently does three moving jobs per week, but with one more employee, the company could manage five jobs per week. The company charges $80 for a moving job.
a. What would be the new employee's marginal product of labor?
b. What is the value of that marginal product?
c. Should the moving service hire a fourth worker?