Asked by Andrew Shoffler on Jul 18, 2024
Verified
Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Harry should
A) hire the second barber because she will add $28 to profits.
B) hire the second barber because she will add $108 to profits.
C) not hire the second barber, because she is less productive than the first barber.
D) not hire the second barber, because she will diminish profits.
Productive
The efficiency at which an individual, company, or economy can convert input resources into useful output.
Diminish Profits
The reduction in the amount of earnings as a result of increased costs, decreased revenue, or both.
- Acquire knowledge about the methodology of deciding on resource utilization, focusing on their marginal costs and revenue products.
- Fathom the contexts in which the infusion of more employees is financially viable or contributes to the peak of profitability.
Verified Answer
(N
(K12_HN) Nguyen Thi Ngoc AnhJul 21, 2024
Final Answer :
A
Explanation :
With one barber, the shop's daily revenue from haircuts is 24 * $6 = $144. The cost of the barber is $10 * 8 = $80, leaving a profit of $64. With two barbers, the total revenue is 42 * $6 = $252. The total cost for two barbers is 2 * $80 = $160. The new profit is $252 - $160 = $92. The second barber adds $92 - $64 = $28 to profits.
Learning Objectives
- Acquire knowledge about the methodology of deciding on resource utilization, focusing on their marginal costs and revenue products.
- Fathom the contexts in which the infusion of more employees is financially viable or contributes to the peak of profitability.
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