Suppose the marginal expense of hiring another worker is $150 andthe marginal ex

Question

Suppose the marginal expense of hiring another worker is $150 andthe marginal expense of hiring current worker for an extra hour is$10. The added output associated with an added worker holding bothcapital and average hours per worker constant is $120. The addedoutput generated by increasing average hours per worker, holdingcapital and number of employees constant, is 7. If the firm isinterested in maximizing profits, what should it do? Assumeincreasing workers or hours a workers works keeps marginal expensesconstant.
Suppose the marginal expense of hiring another worker is $150 andthe marginal expense of hiring current worker for an extra hour is$10. The added output associated with an added worker holding bothcapital and average hours per worker constant is $120. The addedoutput generated by increasing average hours per worker, holdingcapital and number of employees constant, is 7. If the firm isinterested in maximizing profits, what should it do? Assumeincreasing workers or hours a workers works keeps marginal expensesconstant.

Explanation / Answer

Let the current worker stay for an extra 10$ an hour. Because the marginal expense of hiring a new worker is more than keeping an additional worker.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.