question archive 1) Harry owns a barbershop and charges $6 per haircut
1) Harry owns a barbershop and charges $6 per haircut
Subject:EconomicsPrice:3.87 Bought7
1) 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 provide a total of 42 haircuts per day.
a. What is the marginal product of the second barber?
b. Should Harry hire two barbers? Why or why not?
2) Marginal resource cost refers to the:
a. Increase in total revenue resulting from the sale of the extra output of one more worker.
b. Price at which additional units of a resource can be hired in an imperfectly competitive resource market.
c. Increase in total cost resulting from producing one more unit of output.
d. Amount by which a firm’s total resource cost increases as the result of hiring one more unit of the resource.
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Answer:
1.
A. Marginal product of the 2nd barber = total product when 2 barbers are hired - total product when 1 barber is hired = 42 - 24 = 18 haircuts.
B. The wage cost for the 2nd barber = hours worked * wage per hour = 8 * $10 = $80. The marginal revenue product of the 2nd barber = marginal product * price = 18 * $6 = $108. The marginal revenue product of the 2nd barber is higher than the wage of the 2nd barber. So, the second barber should be hired.
2.
Option D. Amount by which a firm’s total resource cost increases as the result of hiring one more unit of the resource.
Explanation: Marginal resource cost refers to the increase in total resource cost when a firm hires one more unit of the resource.
