Should Harry Hire a Second Barber?

The Profitability of Hiring a Second Barber

Harry owns a barbershop and charges $15 per haircut. By hiring one barber at $12 per hour, the shop can provide 18 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 39 haircuts per day.

Should Harry hire the second barber or not?

Harry should hire the 2nd barber because she will add $315 to profits.

Explanation: To determine if Harry should hire a second barber, we need to compare the profits with and without the second barber. With one barber, the shop can make 18 haircuts in 8 hours, so the profit is $15 x 18 = $270. Hiring a second barber increases the total haircuts to 39, so the profit would be $15 x 39 = $585. The additional profit from hiring the second barber is $585 - $270 = $315. Therefore, Harry should hire the second barber because she will add $315 to profits.

Harry should

A. hire the second barber because she will add $219 to profits.
B. hire the second barber because she will add $315 to profits.
C. not hire the second barber, because she is less productive than the first barber.
D. not hire the second barber, because she will diminish profits.

Final answer: Harry should hire the second barber because she will add $315 to profits.