Barry's Brewpub is considering hiring more brewmasters. A pint of brew sells for $3. The market wage of a brewmaster is $150 per day. Assuming that the market for beer is perfectly competitive, Barry's Brewpub will hire another brewmaster only if Barry believes the new brewmaster will:
A) produce the same number of pints per day as the last brewmaster hired.
B) produce 50 or more pints per day.
C) raise total production to 50 or more pints per day.
D) increase the marginal product by $150 per day.

Question

Quizplus · Accepted Answer

Barry's Brewpub will hire another brewmaster if the additional revenue generated by the new brewmaster (marginal revenue product) is at least equal to the cost of hiring them. Since a pint sells for $3, the brewmaster must produce at least 50 pints per day to cover the $150 wage ($3 x 50 = $150).

Barry's Brewpub Is Considering Hiring More Brewmasters