Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Hire the worker to increase profits
B
Not hire the worker as costs exceed revenue
C
Hire the worker only if previous workers are underperforming
D
Hire the worker to maintain current output levels
Understanding the Answer
Let's break down why this is correct
Answer
The firm should hire the additional worker because the marginal revenue product (MRP) is greater than the marginal factor cost (MFC). In this case, the MRP of the worker is $300, meaning the worker can generate that much additional revenue for the firm. The MFC, which is the cost of hiring the worker, is only $250. Since the revenue gained from hiring the worker exceeds the cost of hiring them, the firm will make a profit of $50 for each additional worker hired. Therefore, hiring the worker is a good decision for the firm's profitability.
Detailed Explanation
The firm should hire the worker because the money made from the worker is more than what it costs to hire them. Other options are incorrect because This choice thinks the costs are higher than the earnings; This option suggests hiring depends on other workers' performance.
Key Concepts
Marginal Revenue Product
Marginal Factor Cost
Profit Maximization
Topic
Marginal Revenue and Profit Calculations
Difficulty
hard level question
Cognitive Level
understand
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