A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $20,
A)the MR of hiring the worker is $2000
B)The MC of hiring the worker is $1500
C)The firm should hire the worker since MBMC
D)All the above

Question

A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $20,
A)the MR of hiring the worker is $2000
B)The MC of hiring the worker is $1500
C)The firm should hire the worker since MB>MC
D)All the above

Quizplus · Accepted Answer

The marginal revenue (MR) from hiring the worker is 100 units * $20 = $2000. The marginal cost (MC) of hiring the worker is $1500. Since MR ($2000) > MC ($1500), the firm should hire the worker.

A Firm Is Thinking of Hiring an Additional Worker to Their