A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should
A) not hire a fourth worker.
B) hire four workers.
C) hire five workers.
D) hire more than five workers.

Question

Quizplus · Accepted Answer

The marginal revenue product of the fourth worker is $50 ($200 - $150), which is greater than the cost of the worker ($40). Therefore, the firm should hire the fourth worker.

A Profit-Maximizing Firm's Daily Total Revenue Is $155 with 3