The owner of a car wash calculates that by hiring one additional worker, the car wash can wash 50 more cars per week at an average of $5 per wash. The owner will pay the worker $9 per hour for 30 hours per week.

What do you think the owner's decision will be when considering marginal costs and benefits?

a. The owner will hire the worker because the marginal costs of $270 per week will be offset by the benefit of doing more car washes each week.

b. The owner will not hire the worker because the marginal costs of $270 per week are greater than the marginal benefits of $250 per week.

c. The owner will not hire the worker because the marginal costs of $250 per week are less than the marginal benefits of $270 per week.

d. The owner will hire the worker because the marginal costs of $250 per week are less than the marginal benefits of $270 per week.

Question

Mathematics

Neil Wolfe

7 August, 09:39

The owner of a car wash calculates that by hiring one additional worker, the car wash can wash 50 more cars per week at an average of $5 per wash. The owner will pay the worker $9 per hour for 30 hours per week.

What do you think the owner's decision will be when considering marginal costs and benefits?

a. The owner will hire the worker because the marginal costs of $270 per week will be offset by the benefit of doing more car washes each week.

b. The owner will not hire the worker because the marginal costs of $270 per week are greater than the marginal benefits of $250 per week.

c. The owner will not hire the worker because the marginal costs of $250 per week are less than the marginal benefits of $270 per week.

d. The owner will hire the worker because the marginal costs of $250 per week are less than the marginal benefits of $270 per week.

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Answers (1)

Know the Answer?

Yoselin Delacruz · Answer 1

Let's see what we know:

the car wash can wash 50 more cars per week at an average of $5 per wash. The owner will pay the worker $9 per hour for 30 hours per week.

So, the total additional earnings for the car wash will be: 50*5=250 dollars.

But the additional costs, will be: 9*30=270

so it seems that the car wash would spend more than earn - not a good decision for business! so the correct answer is:

b. The owner will not hire the worker because the marginal costs of $270 per week are greater than the marginal benefits of $250 per week