Charles McCoy is a manager at a coffee shop, and he has to decide how many workers to hire. One worker can make 20 drinks that sell for $4 on average in one hour. A second worker can make another 16 drinks in one hour. The marginal benefit of each additional worker decreases by four 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)Four
B)Five
C)Six
D)Seven

Question

Quizplus · Accepted Answer

The marginal benefit of hiring each additional worker decreases by four drinks. The first worker makes 20 drinks, the second 16, the third 12, the fourth 8, and the fifth 4. The revenue from each worker is calculated by multiplying the number of drinks by $4. The cost of each worker is $15 per hour. Charles should hire workers until the marginal revenue equals the marginal cost. The fifth worker's revenue (4 drinks x $4 = $16) is just above the cost ($15), so hiring five workers maximizes profit.

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