Suppose Mongo Runs a Glue Factory in Knuckle,North Dakota

question 23

Multiple Choice

Suppose Mongo runs a glue factory in Knuckle,North Dakota.Mongo wants to fire his cousin Beevo for not working very hard at making glue.If firing Beevo would save Mongo $6.11 per hour in wages and the value of Beevo's marginal product equals $7.29 per hour,to maximize his profit,Mongo should

• A) fire Beevo.
• B) keep Beevo employed.
• C) add another worker, Teevo, Beevo's sister, whose value of the marginal product would be $4.83 per hour and whose wage would be $6.11 per hour.
• D) increase the wage he pays Beevo to $7.29 per hour.
• E) There is not enough information given to determine what Mongo should do.

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Definitions:

Marginal Cost

The cost of producing an additional unit of a product, highlighting the concept of increment in total cost with an increase in production.

Tuition

The fee that educational institutions charge for instruction.

Books

Physical or electronic publications consisting of written, printed, or illustrated work bound together for reading or study.

Inventory Cost

The total cost associated with holding and managing inventory, including storage, insurance, and obsolescence.