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

Hiring the fourth worker increases total revenue from $155 to $200, a gain of $45, which is more than the cost of the worker ($40). Hiring the fifth worker increases total revenue from $200 to $230, a gain of $30, which is less than the cost of the worker ($40). Therefore, the firm maximizes profit by hiring four workers.

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