Question

Suppose that you need 6,000 units of work (in capacity units) to be performed, and you can hire all the laborers that you want. (However, keep in mind that you cannot hire fractions of workers and that all workers must be paid the same wage). Assume that all income earned by the laborers is paid to them by you, and that all income is spent on nutrition. The capacity curve for each laborer is described as follows: for all payments up to $150, capacity is zero and then begins to rise by 1 unit for every additional dollar paid. This happens until an income of $300 is paid out. Thereafter, an additional dollar paid out increases capacity by only 0.75 units, until total income paid is $1,000. At this point, additional payments have no effect on work capacity. Assume that you would like to get your work done at minimum cost. Describe how many laborers you would hire to get your work done, and how much you would pay each of them.

Answer 1

We need to hire till the average cost keeps going down, which happens till we pay $1000 to a worker and he/she produces 675 units of work. We would be employing 9 workers at a total cost of 9000.

Or 10 workers still at a total cost of 9000.

Pls see the two tables

For each worker
Payment	Marginal work units	Total work units	Cost / work unit
150	0	0	0
300	150	150	0.5
1000	525	675	0.675
No. of workers required
8.888889
9
Total payment to them
9000

For each worker
Payment	Marginal work units	Total work units	Cost / work unit
150	0	0	0
300	150	150	0.5
900	450	600	0.666667
No. of workers required
10
10
Total payment to them
9000