Question

A restaurant in Seattle can employ either Kiosks, K, and Cashiers, C, to process customers. Cashiers and Kiosks are perfect substitutes. A Cashier can process 50 customers per hour and a Kiosk can process 100 customers per hour. The hourly wage for a worker is $10 dollars per hour and the hourly cost of operating a Kiosk is $25 per hour. Determine if the following statement is either True or False. If the minimum wage increases to $15 per hour, then the hourly cost of processing 100 customers increases from $20 to $25.

Please show the work so that I can understand the concept better thank you

Answer 1

The hourly wage for a worker is $10 dollar per hour and can process 50 customers. so the productivity of labor is 50 customer per hour. so cost of process 100 customer is $20.

now when the minimum wage increases to $15. then the cost of process 100 customer is = 15* 2 = $30 .so the cost of processing 100 customer from labor has increase from $20 to $30. therefore, to minimize the cost , a restuarant owner should employ kiosks since the the cost of process 100 customer is $25.

Therefore the Statement is TRUE. If the minimum wage increases to $15 per hour, then the hourly cost of processing 100 customers increases from $20 to $25.