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. What should Liyun do?

Question

Quizplus · Accepted Answer

The additional worker would generate 100 units x $10 = $1000 in revenue per week, which is greater than the $500 wage cost, so Liyun should hire the worker.

Liyun Owns a Small Flower Shop, and the Industry Is