Final answer:
Harry should hire the second barber because it would lead to a greater division of labor and specialization, resulting in increasing marginal productivity and improved efficiency in the barber shop.
Step-by-step explanation:
The information suggests that Harry should hire the second barber because it would lead to a greater division of labor and specialization, resulting in increasing marginal productivity. In a one-man barber shop, the single barber has to handle multiple tasks such as greeting customers, answering the phone, cutting hair, sweeping, and running the cash register. By hiring a second barber, the level of disruption is reduced, allowing each barber to focus on specific tasks and increasing efficiency.
As the shop adds more barbers, the advantage of each additional barber diminishes due to the limited scope of labor specialization. For example, adding a sixth or seventh barber just to greet people at the door would have less impact than hiring the second barber. This is known as the pattern of diminishing marginal productivity.
Furthermore, adding too many barbers can lead to negative returns as they may start to interfere with each other, resulting in a decrease in output. Therefore, hiring the second barber would be a good decision to improve productivity and efficiency in the barber shop.