Scenario: A car repair shop hires workers and pays them the federal minimum wage of $7.25. The following table shows the marginal returns to each worker in terms of number of cars repaired.

-Refer to the scenario above.If this firm hires 3 workers,how many cars in total can the shop repair per day?

Question

Scenario: A car repair shop hires workers and pays them the federal minimum wage of $7.25. The following table shows the marginal returns to each worker in terms of number of cars repaired.
 
-Refer to the scenario above.If this firm hires 3 workers,how many cars in total can the shop repair per day?

Quizplus · Accepted Answer

According to the table, the marginal return for the first worker is 8, for the second worker it is 9, and for the third worker it is 10. Since the marginal return for the third worker is the highest, it is most efficient to hire three workers. Therefore, the total number of cars repaired per day is 3 x 10 = 30.

Scenario: a Car Repair Shop Hires Workers and Pays Them