Aliyah is preparing to expand her IT consulting company. The current market rate for IT professionals is $58,000 per year. Each

Question

2 months ago

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Aliyah is preparing to expand her IT consulting company. The current market rate for IT professionals is $58,000 per year. Each

employee she hires will also require a computer and equipment that costs $6,000 per employee annually. Hiring more employees means that Aliyah can provide consulting services to more clients each year. Each client Aliyah has will pay her $10,000 per year.The number of clients Aliyah can take on is dependent on the number of workers she hires and is depicted in the accompanying table.Use this information to calculate the marginal cost and the marginal benefit of hiring each worker.Number of workers Clients per year0 01 112 203 274 32a. The first worker's marginal cost is $__________.b. The first worker's marginal benefit is $__________.c. The second worker's marginal cost is $__________.d. The second worker's marginal benefit is $__________.e. The third worker's marginal cost is $__________.f. The third worker's marginal benefit is $__________.g. The fourth worker's marginal cost is $__________.h. The fourth worker's marginal benefit is $__________.i. Using the rational rule to maximize her economic surplus, Aliyah should hire _________ workers.

Business

1 answer:

Free_Kalibri [3.7K] · Answer 1 · 2026-02-16T06:32:40+03:00

Answer and Explanation:

a. The marginal cost for the first worker is

= Market rate for an IT professional + computer and equipment expenses

= $58,000 + $6,000

= $64,000 per year

b. The marginal benefit from hiring the first worker is

= Revenue per client × total number of clients

= $10,000 × 11 clients

= $110,000

c. The marginal cost for the second worker is

= Market rate for an IT professional + computer and equipment expenses

= $58,000 + $6,000

= $64,000 per year

d. The marginal benefit for the second worker is

= Revenue per client × additional clients

= $10,000 × (20 clients - 11 clients)

= $90,000

e. The marginal cost for the third worker is

= Market rate for an IT professional + computer and equipment expenses

= $58,000 + $6,000

= $64,000 per year

f. The marginal benefit for the third worker is

= Revenue per client × additional clients

= $10,000 × (27 clients - 20 clients)

= $70,000

g. The marginal cost for the fourth worker is

= Market rate for an IT professional + computer and equipment expenses

= $58,000 + $6,000

= $64,000 per year

h. The marginal benefit for the fourth worker is

= Revenue per client × additional clients

= $10,000 × (32 clients - 27 clients)

= $50,000

i. Aliyah should hire 3 workers since the additional benefits they provide exceed their marginal costs, indicating that the cost of hiring is lower than the benefits gained.