Compared to average-imagine worker one is very productive

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You are the manager of a firm which sells its output at a price of $40 per unit. You are interested in hiring a new worker who you expect will increase your firm’s output by 2,000 units per year. What is the most you should be willing to pay this worker per year to come to your firm? B. Suppose a firm currently pays all of its production workers a wage equivalent to the average revenue product of the firm (which equals the price of the firm’s output times the firm’s average product). Compared to the average, imagine worker 1 is very productive, while worker 2 is not very productive. Carefully explain why worker 1 would prefer to be paid a wage equivalent to their marginal revenue product, while worker 2 is content being paid a wage equivalent to average revenue product.

Reference no: EM131098526

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