The Table Below Shows How Total Donations, Average Donations, Total

question 115

Multiple Choice

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. $$\begin{array} { | c | c | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Employees }\end{array} & \begin{array} { c } \text { Total } \\\text { Donations }\end{array} & \begin{array} { c } \text { Average } \\\text { Donations }\end{array} & \begin{array} { c } \text { Total } \\\text { Labor Costs }\end{array} & \begin{array} { c } \text { Average } \\\text { Labor Costs }\end{array} \\\hline 1 & \$ 30,000 & & & \$ 8,000 \\\hline 2 & \$ 42,426 & & \$ 17,000 & \\\hline 3 & & \$ 17,321 & \$ 27,000 & \\\hline 4 & \$ 60,000 & & & \$ 9,500 \\\hline 5 & & \$ 13,416 & \$ 50,000 & \\\hline\end{array}$$ The Chair of the Economics Department at State U says that fundraising employees should be hired as long as their marginal benefit exceeds their marginal cost. If the University follows this advice, then ______ employee(s) will hired, and the net benefit (total donations minus total labor costs) will be ______.

• A)1; $22,000
• B)2; $25,426
• C)3; $25,426
• D)2; $3,476

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Definitions:

Specialization And Trade

An economic concept where individuals or entities focus on producing a limited scope of goods or services to trade for other goods or services rather than trying to produce everything themselves.

Law Of Increasing Opportunity

The principle that the opportunity cost of producing a good increases as more of that good is produced, reflecting trade-offs in resource allocation.

Production Possibilities Curves

A graphical representation that shows the maximum combination of goods and services that can be produced by an economy with given resources and technology.

Trading Possibilities Curves

Graphical representations showing the different combinations of goods that two countries can trade, given their resources and technology.