Question

The human resource manager of the Culinary Chameleon makes the following claim: "Our workers make an average of $400 per week. We produce $4500 worth of output each week using only 10 workers. That averages out to $450 per worker per week. We should therefore hire more people as long as the wage is S400 per week." Assess this claim - is the reasoning solid or do you disagree? (2 points)

Answer 1

It makes no sense in hiring additional workers as the output demand is sufficiently met as per the supply. Moreover the 400 dollar wage produces 450 dollar of work per worker per week which means demand is already satisfied  

It makes sense to hire workers at wage of 400 dollars only if amount of work increases subsequently .