You Own a Pizza Shop Called "Pizzas'R' Us What Is the Dollar Value of Total Production During an Are

question 118

Multiple Choice

You own a pizza shop called "Pizzas'R' Us". Currently you are paying your cooks an hourly wage of $20. You sell a medium pizza for $10. By hiring more cooks, you can increase your pizza production as shown in the following table. $$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Number of } \\\text { cooks }\end{array} & \begin{array} { l } \text { Total production of } \\\text { pizzas each hour }\end{array} \\\hline 0 & 0 \\\hline 1 & 4 \\\hline 2 & 7 \\\hline 3 & 9 \\\hline 4 & 10 \\\hline 5 & 10 \\\hline\end{array}$$ What is the dollar value of total production during an 8-hour shift if you hire 2 cooks?

• A) $320
• B) $560
• C) $70
• D) $140

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Definitions:

Adverse Selection

A situation in financial markets where buyers and sellers have different information, leading to transactions that favor the party with more information, often seen in insurance markets.

Moral Hazard

The risk that one party to a contract can change their behavior to the detriment of another after the contract has been concluded, particularly where one party bears the cost of those actions.

Uncertainty

A state of having limited knowledge where it is impossible to exactly describe existing states or future outcomes.

Incentive Compensation

A form of payment designed to motivate and reward employees for exceeding specific performance goals.