Question 06: Marginal Principle: How Many Hours at the Barber Shop? Theopportunity cost of your time spent cutting hair at your barber shop is $20 per hour.Electricity costs $6 per hour, and your weekly rent is $250. You normally stay opennine hours per day. (b) If you expect to give two haircuts in the 10th hour and youcharge $15 per haircut, is it sensible to stay open for the extra hour? Why?OA)OB)Yes, since the marginal benefit (the revenue from the two haircuts) isGREATER THAN the marginal cost.Yes, since the marginal benefit (the revenue from the two haircuts) is LESSTHAN the marginal cost.C)No, since the marginal benefit (the revenue from the two haircuts) is LESSTHAN the marginal cost.

The opportunity cost of time spent on cutting hair at a barber shop is $20 per hour.(variable cost)…

Answered: OA) Yes, since the marginal benefit…

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Economics

OA) Yes, since the marginal benefit (the revenue from the two haircuts) is GREATER THAN the marginal cost.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter20: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 2CQ

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Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

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