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Chapter 7: Problem 2

The additional output obtained by adding an additional worker is 50 units. Each unit can be sold for \(\$ 2 .\) Is it worth hiring the additional worker if she is paid \(\$ 150\) a day? Explain your answer.

Short Answer

Expert verified
No, it wouldn't be worth hiring the additional worker as the revenue from the extra units ($100) is less than the cost of hiring ($150).

Step by step solution

01

Calculate the revenue from the additional units

The additional worker produces 50 units and each unit can be sold for $2. The revenue from these additional units is calculated by: Number of Units * Price per unit = Revenue. Plugging in the values, we have: \(50 * 2 = 100\). So, the revenue obtained from the additional worker is $100.
02

Compare the Revenue with the cost of hiring

Now, it's time to check if the revenue of $100 is greater than the cost of hiring the worker, which is $150. Comparing these two values, it is clear that $100 (revenue) is less than $150 (cost).
03

Make a decision

Since the revenue from the additional worker is less than the cost of hiring, therefore, it would not be financially beneficial to hire the additional worker.

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Most popular questions from this chapter

An airline has 100 seats to sell on a plane traveling from New York to Los Angeles. It sells its tickets for \(\$ 450\) each. At this price, 97 tickets are sold. Just as the plane is about to take off, a person without a ticket says he is willing to pay 150 dollar, but not one penny more, to buy a ticket on the plane. The additional cost of the additional passenger (to the airline)- that is, the marginal cost to the airline-is 100 dollar.Is it in the best interest of the airline to sell the person a ticket for 150 dollar? Explain your answer.

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