Question

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. Number of Employees Total Donations Average Donations Total Labor Costs Average Labor Costs 1 $30,000 $8,000 2 $42,426 $17,000 3 $17,321 $27,000 4 $60,000 $9,500 5 $13,416 $50,000 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 ______.

Answer 1

Answer:

2 employees will be hires and net benefits will $25,426

Explanation:

I have attached an excel for perusal.

In it i have calculated the missing figures,but please note the formulas i have used as stated as below:

Total costs= Average costs* number employees

Total donations= average donations*number of employees

Average costs=total costs /number of employees

Average revenue =total donations /number of employees

Marginal cost=Total costs at higher range-Total costs at lower range/(Number of employees at higher range -Number of employees at lower range)

Marginal donations=Total donations at higher range-Total donations at lower range/(Number of employees at higher range -Number of employees at lower range)