Question

From the article: “Anchor Industries Inc. a maker of tents for weddings and other events, is struggling to hire enough workers and keep its factory running safely to meet demand…”. Anchor industries will likely have to pay newly hired workers higher wages to produce enough additional tents to meet increased consumer demand. If the marginal product of an additional worker was five tents per day, what additional information would be required to determine if Anchor Industries should hire this worker?

Answer 1

2 additional information are required. Firstly, salary of each person. Secondly, the cost of each tent. This way, we will be able to find the total costs associated with an additional and how much can we gain from hiring him, i.e. if the total cost = Marginal product of worker*Price of product is more than the money paid to worker, then he must be hired otherwise not.

If the total benefits of hiring an additional labour, is less than the revenue obtained by selling those 5 additional tenets, then we will hire the labourer, else not.

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