The company currently employs 40 workers in production and 5
supervisors. The marginal output of the last production factor is
36 units per hour and pays production workers $ 8 per hour. The
marginal output of another supervisor is 120 units per hour and
pays supervisors $ 20 per hour. Each employee works 40 hours a
week.
(A) What is the total employment of the company per week?
(B) It is assumed that the hours worked by the supervisors (Ls) are
drawn on the vertical axis and the hours worked by the production
workers (Lp) are drawn on the horizontal axis. What is the equation
of the company's equal product line? What is my point intercepts
the section of the isocost equal cost line?
(C) Assume that the company's curves are smooth curves and that the
working hours can change continuously. Does the company produce the
maximum level of production given its current level of cost? If so,
explain how you can find out. If not, explain what needs to be done
to increase production.
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