a.1. The marginal cost of hiring each worker is $64,000 ($58,000 +$6,000).
a.2. The marginal revenue of hiring each worker is as follows:
1st worker = $165,000 ($165,000 - $0)
2nd worker = $135,000 ($300,000 - $165,000)
3rd worker = $105,000 ($405,000 - $300,000)
4th worker = $75,000 ($480,000 - $405,000)
b. To maximize her economic surplus, Aliyah should hire 4 workers because her total profit will be $224,000.
Marginal cost is the additional cost that Aliyah incurs when she hires an additional worker. Her marginal revenue is the additional revenue that she generates by hiring an additional worker.
Number Clients per Total cost Marginal Revenue Marginal
of worker year per year Cost per year Revenue
0 0 $0 $0 $0 $0
1 11 $64,000 $64,000 $165,000 $165,000
2 20 $128,000 $64,000 $300,000 $135,000
3 27 $192,000 $64,000 $405,000 $105,000
4 32 $256,000 $64,000 $480,000 $75,000
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