Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The Marginal Revenue Product of Labor (MRPL) is $6, and the Marginal Factor Cost (MFC) is $8.
B
The MRPL is $10, and the MFC is $8.
C
The MRPL is $8, and the MFC is $8.
D
The MRPL is $4, and the MFC is $8.
Understanding the Answer
Let's break down why this is correct
Answer
A manager should consider hiring more workers when the current number of workers is not enough to meet customer demand. If customers are waiting too long or if the company is unable to produce enough products, this means there is a potential for lost sales and profits. For example, if a bakery has only two bakers, but customers are lining up for fresh bread, hiring a third baker could help meet that demand and increase sales. Additionally, if the cost of hiring a new worker is less than the extra profits generated from the increased production, it makes sense to hire more workers. By doing this, the manager can ensure the business runs smoothly and profits grow.
Detailed Explanation
In this case, the extra money made from hiring one more worker is $10. Other options are incorrect because Here, the money made from an extra worker is $6, but it costs $8 to hire them; In this scenario, the money made is equal to the cost of hiring.
Key Concepts
Marginal Revenue Product of Labor (MRPL)
Marginal Factor Cost (MFC)
Profit Maximization
Topic
Profit Maximization in Labor Markets
Difficulty
hard level question
Cognitive Level
understand
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