Liyun owns a small flower shop,and the industry is perfectly competitive.She is considering whether to hire an additional worker.The wage rate for the worker is $500 per week;the marginal product of the additional worker would be 100 units per week;and the price of the units is $10 each.Liyun should:

Question

Quizplus · Accepted Answer

Liyun should hire the additional worker because the marginal product of the worker (100 units per week) is greater than the wage rate ( $500 per week). By hiring the additional worker, she can produce more units of output and generate more revenue. The price of the units is already given, so she does not need to raise the price of the flower arrangements.

Liyun Owns a Small Flower Shop,and the Industry Is Perfectly