Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.3, the contribution to total revenue of the fourth worker hired is
A) $76 per hour.
B) $16 per hour.
C) $4 per hour.
D) $12 per hour.

Question

Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.3, the contribution to total revenue of the fourth worker hired is
A) $76 per hour. 
B) $16 per hour. 
C) $4 per hour. 
D) $12 per hour.

Quizplus · Accepted Answer

The table shows the total product the workers produce (output), the total costs of production, and the total revenue generated by selling that output.

To find the contribution to revenue of the fourth worker, we need to compare the revenue generated by producing 4 units (the output with 4 workers) to the revenue generated by producing 3 units (the output with 3 workers).

With 3 workers, the total product is 3 units and the total revenue is 3 x $4 = $12. 
With 4 workers, the total product is 4 units and the total revenue is 4 x $4 = $16.

Therefore, the contribution to total revenue of the fourth worker hired is $16 - $12 = $4 per hour. This means that each additional worker hired contributes an extra $4 to the total revenue generated. Therefore, the answer is B.

Assume That the Product Price Is $4 Per Unit and That