Asked by Riranda Moorman on Jul 02, 2024
Verified
If hiring the 4th worker increases total product by 50 units and the price of each unit is $15,
A) the firm should not hire the 4th worker as MR<MC
B) marginal revenue equals $150
C) the firm should hire the 4th worker as MR>MC
D) the firm should not hire the 4th worker as MR<TC
Marginal Revenue
The additional revenue gained from selling one more unit.
Marginal Cost
The cost associated with producing one additional unit of a product or service.
Total Product
The total quantity of output produced by a firm or economy, resulting from the use of given inputs over a specific period.
- Learn about the relationship between marginal cost (MC), marginal revenue (MR), and their impact on hiring and production decisions.
Verified Answer
MN
Metfula Nhlonipho7 days ago
Final Answer :
C
Explanation :
Since hiring the 4th worker would increase total product by 50 units and each unit is sold at $15, the additional revenue generated would be $750 (50 units x $15). The marginal cost of hiring the 4th worker would be the cost of his/her wage, which is assumed to be less than $750 since hiring the worker would be profitable. Therefore, the marginal revenue (MR) would be greater than marginal cost (MC) and the firm should hire the 4th worker.
Learning Objectives
- Learn about the relationship between marginal cost (MC), marginal revenue (MR), and their impact on hiring and production decisions.