Question

Comfy Clothing is thinking of hiring Tom. If hired, he can increase total production by 100 units a week. He would cost the firm $1,500 a week in wages. If the price of each unit is $20:_______

a. the MR of hiring the worker is $2,000
b. The MC of hiring Tom is $1,500
c. The firm should hire Tom since MR>MC
d. All of the above

Answer 1

Answer: d. All of the above.

Step-by-step explanation:

The marginal revenue for hiring the workers will be:

= 100 × $20

= $2000

Marginal cost of hiring Tom is $1500. Likewise, the firm should hire Tom since marginal revenue of $2000 is greater than the marginal cost of $1500.

Therefore, the correct option is All of the above.