Question

Eric is a house painter. He can paint 8 houses per month on his own. He is considering hiring his friend Marty to help with his house painting business. Marty has less experience than Eric and can paint 5 houses per month on his own. Together, Eric and Marty can paint 15 houses per month. What is the marginal benefit to Eric (in terms of number of houses his business can paint per month) from hiring Marty?

Answer 1

Answer:

Hiring Marty will provide a marginal benefit of 7 more house per month

Explanation:

the benefit will be the marginal income from hiring Marty, not the output Marty can do on his own.

Eric alone 8 house

Eric + Martin = 15 house

Martin increase in output: 7 house

We could also made the case about Martin increasing ability will made this go up, but for now, we can be sure that Matin provides a marginal benefit of 7 house.