Rosie's Flower Shop sells bouquets of roses for $15 each. If Rosie hires 10 workers, she can sell 500 bouquets per week. If she hires 11 workers, she can sell 560 bouquets per week. Rosie pays each of her workers $400 per week. Which of the following is correct? A. For the 11th worker, the marginal profit is $500. B. For the 11th worker, the marginal revenue product is $500. C. The firm is maximizing its profit. D. If the firm is employing 11 workers, then its profit would increase if it cut back to 10 workers.

Question

Business

Lizeth Hull

7 August, 03:10

Rosie's Flower Shop sells bouquets of roses for $15 each. If Rosie hires 10 workers, she can sell 500 bouquets per week. If she hires 11 workers, she can sell 560 bouquets per week. Rosie pays each of her workers $400 per week. Which of the following is correct? A. For the 11th worker, the marginal profit is $500. B. For the 11th worker, the marginal revenue product is $500. C. The firm is maximizing its profit. D. If the firm is employing 11 workers, then its profit would increase if it cut back to 10 workers.

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Answers (1)

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Will Curtis · Answer 1

The correct answer to this question is A) with the addition of 11th worker, the marginal profit (for 11th worker) of Rosie's flower shop would be $500.

Explanation:

Marginal profit can be defined as the additional amount of profit that a company earns because of an additional unit that had been produced.

Here we can calculate what marginal profit would be for the 11th worker as-

Workers Selling price Cost price Profit

10 $7500 (500 x $15) $4000 (10 x $400) $3500

11 $8400 (560 x $15) $4400 (11 x $400) $4000

So from the given above information we can say that if we take out the marginal profit for 11th worker it would be $500 ($4000 - $3500).