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 $12,
A)the MR of hiring the worker is $1500
B)The MC of hiring the worker is $1200
C)The firm should not hire the worker since MB

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 $12,
A)the MR of hiring the worker is $1500
B)The MC of hiring the worker is $1200
C)The firm should not hire the worker since MB<MC
D)All the above

Quizplus · Accepted Answer

To calculate the marginal benefit (MB) of hiring the worker, we need to find the additional revenue generated by the 100 extra units produced:

MB = 100 units x $12 per unit = $1200 per week

Since the cost of hiring the worker (MC) is $1500 per week, the firm would incur a net loss of $300 per week if they hired the worker. Therefore, the firm should not hire the worker since the marginal benefit is less than the marginal cost.

A Firm Is Thinking of Hiring an Additional Worker to Their