Question

The owners of the Cheesy Burger Restaurant must decide how many new employees to add to their existing number of workers. Based on the information below, how many workers should the owners add if a worker earns $9 per hour?

Answer 1

Answer:

Cheesy Burger should hire four workers

Explanation:

Number of           Total revenues       Marginal                  Marginal cost

workers                per hour                   revenue                  per worker

1                               $30                           $30                           $9

2                              $48                           $18                            $9

3                              $62                           $14                            $9

4                             $72                         $10                          $9

5                              $80                           $8                             $9

6                              $84                          $4                             $9

The marginal revenue generated by the fourth worker ≥ marginal cost per worker ($10 ≥ $9).

But the marginal revenue generated by the fifth worker < marginal cost ($8 < $9).