Question

Your employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week. The wage rate for each of the first forty hours will continue to be the usual $15 per hour. In terms of dollars, what is the marginal benefit of working each hour of overtime?
A.) $18.00
B.) Zero
C.) $3.00
D.) $15.00

Answer 1

Answer: A.) $18.00

Step-by-step explanation:

Marginal benefit is the amount by that the total benefit increases with each extra hour of work.

Given : The wage rate for each of the first forty hours will continue to be the usual $15 per hour.

The employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week.

Here , Total earning =  $15 x (first 40 hours)+ $18 (Each additional hours)

Here , the total earning is increasing by each additional hour of working after first 40 hours.

Therefore , the marginal benefit of working each hour of overtime is $18.00.

Hence, the correct answer is A.) $18.00