Question

Question 3 Hours Open Total Revenue (dollars) $275 375 450 500 53 550 Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour. What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis? a) Using marginal analysis, how many hours should Ivan extend his hours of operations? b) What is Ivan's marginal benefit if he decides to stay open for six hours instead of five hours? c) d) What is lvan's marginal cost if he decides to stay open for six hours instead of five hours?
b c and d

Answer 1

Hours open	Total revenue $	MR
1	275
2	375	100
3	450	75
4	500	50
5	530	30
6	550	20
Wage rate is $25 per hour.
b)
5 hours since MR ($30) is greater than MC, which is wage rate of $25.
c)
$20 ( $550-$530=$20)
d)
$25
Since the wage rate is $25 per hour.