You own a pizza shop called "Pizzas'R' Us". Currently you are paying your cooks an hourly wage of $20. You sell a medium pizza for $10. By hiring more cooks, you can increase your pizza production as shown in the following table. $$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Number of } \ \text { cooks } \end{array} & \begin{array} { l } \text { Total production of } \ \text { pizzas each hour } \end{array} \ \hline 0 & 0 \ \hline 1 & 4 \ \hline 2 & 7 \ \hline 3 & 9 \ \hline 4 & 10 \ \hline 5 & 10 \ \hline \end{array}$$ If you operate one hour every day, what is the marginal benefit of hiring the 3^rd cook?

Question

Quizplus · Accepted Answer

By hiring the 3rd cook, the production of pizzas increases from 7 to 9, resulting in an increase of 2 pizzas per hour.

At a cost of $20 per hour for the cook, the cost per additional pizza is $10.

Therefore, the marginal benefit of hiring the 3rd cook is $20, as the additional pizzas produced will result in $20 in additional revenue (2 pizzas x $10 per pizza).

You Own a Pizza Shop Called "Pizzas'R' Us If You Operate One Hour Every Day, What Is the Are