Asked by
Sarah Lisson
on Nov 30, 2024Verified
An auto service station has four mechanics.If the marginal revenue product of the fourth worker is $375 per day and the mechanics are paid $150 per day,the firm
A) can make a greater profit by laying off some of the mechanics.
B) can make a higher profit by hiring more mechanics.
C) is maximizing profits.
D) will reduce its profits if it hires more mechanics.
Marginal Revenue Product
The additional revenue generated from using one more unit of a factor of production or input.
Mechanics
The branch of physics that deals with the behavior of physical bodies when subjected to forces or displacements and the subsequent effects of the bodies on their environment.
Profit
The financial gain made in a transaction or through business operations after subtracting all expenses.
- Discover the link between marginal revenue product and how firms assess their need for labor and inputs.
Verified Answer
KH
Learning Objectives
- Discover the link between marginal revenue product and how firms assess their need for labor and inputs.