Comfy Clothing is thinking of hiring Tom.If hired,he can increase total production by 100 units a week.He would cost the firm $1,500 a week in wages.If the price of each unit is $20,
A)The MR of hiring the worker is $1,500
B)The MC of hiring Tom is $1,500
C)The firm should hire Tom since MRMC
D)All the above

Question

Comfy Clothing is thinking of hiring Tom.If hired,he can increase total production by 100 units a week.He would cost the firm $1,500 a week in wages.If the price of each unit is $20,
A)​The MR of hiring the worker is $1,500
B)The MC of hiring Tom is $1,500
C)The firm should hire Tom since MR>MC
D)​All the above

Quizplus · Accepted Answer

The MR (Marginal Revenue) of hiring Tom is $2,000 (100 units * $20 each), which is the additional revenue from hiring him. The MC (Marginal Cost) of hiring Tom is his wage, $1,500. Since MR ($2,000) is greater than MC ($1,500), the firm should hire Tom, making all statements correct.

Comfy Clothing Is Thinking of Hiring Tom