Charles McCoy is a manager at a coffee shop, and he has to decide how many workers to hire. One worker can make 25 drinks that sell for $5 on average in one hour. A second worker can make another 20 drinks in one hour. The marginal benefit of each additional worker decreases by five drinks, with each additional hire. Given that workers are paid $15 per hour and have eight-hour shifts, how many employees should Charles hire for each hour?
A)Three
B)Four
C)Five
D)Six

Question

Quizplus · Accepted Answer

The marginal benefit of hiring each additional worker decreases by five drinks. The first worker makes 25 drinks, the second 20, the third 15, the fourth 10, and the fifth 5. The revenue from each worker is calculated by multiplying the number of drinks by $5. The cost of each worker is $15 per hour. Charles should hire up to the point where the marginal revenue equals the marginal cost. The fifth worker's revenue is $25, which is still greater than the cost of $15, so five workers should be hired.

Charles McCoy Is a Manager at a Coffee Shop, and He