Question

You operate a shop that repairs TVs and VCRs. The going wage rate in a competitive...

You operate a shop that repairs TVs and VCRs. The going wage rate in a competitive market for skilled repair people is $18 per hour. Given the current demand for your services, the marginal revenue product of your repair people is $28 per hour. If you were to employ one more hour of a repair person's services you would: a). increase your profit by $28. b). increase your profit by $18. c). increase your profit by $10. d). not increase your profit at all.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Wage rate = $18 per hour

Marginal revenue product , MRP = $28

Based on the given information , marginal revenue product i.e VMP= $28 and W=$18. Because VMP>W , therefore the owner should hire a repair man for 1 more hour. Thismeans that in order for the shop owner to increase profit, it must increase the quantity of labor employed. If the shop owner were to employ one hour of a repair services , he would increase profit by $(28-18)= $10. Hence, option(C) is correct.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You operate a car detailing business with a fixed amount of machinery (capital), but you have...
You operate a car detailing business with a fixed amount of machinery (capital), but you have recently altered the number of workers that you employ per hour. Three employees can generate an average product of 6 cars per person in each hour, and four employees can generate an average product of 5 cars per person in each hour.  If the wage is $10 per hour, what is the marginal cost as you increase the labor from three to four employees? A....
You manage Widgets USA, a small manufacturer of widgets in a perfectly competitive market. Below is...
You manage Widgets USA, a small manufacturer of widgets in a perfectly competitive market. Below is your production function for widgets, showing the relationship between the number of workers you hire per hour and the hourly volume of widgets produced at different levels of labor. Your total fixed costs, regardless of production volume and hiring rate, are $100/hour, representing the rental contract rate per hour of your single production line. Number of workers hired per hour Widgets produced per hour...
The table below represents a production schedule for Quincy’s Quiche Corner, a restaurant in a mall...
The table below represents a production schedule for Quincy’s Quiche Corner, a restaurant in a mall that sells quiches. Assume Quincy’s operates in a perfectly competitive environment (in both input and output markets), so it is both a price-taker and a wage-taker. a) Fill in the missing values in the table, assuming the selling price per quiche is $3.     Workers   Output (quiches)    Marginal Product Value of Marginal Product                                 0                 0                                  1                 10                         10                       $30...
Suppose Lu operates a profit maximizing shop in a perfectly competitive market where all firms are...
Suppose Lu operates a profit maximizing shop in a perfectly competitive market where all firms are identical. Her fixed costs are $14 per month. Her variable costs per month are given in the following table: (For simplicity, assume Lu can only produce in whole units each month) Use the table below to fill in the missing values for total cost, average variable cost (AVC) and average total cost (ATC). Use your table to calculate the marginal cost for each additional...
1. Compared with a perfectively competitive market a monopoly is inefficient because                    a. it raises...
1. Compared with a perfectively competitive market a monopoly is inefficient because                    a. it raises the market price above marginal cost and produces a smaller output.             b. it produces a greater output but charges a lower price.             c. it produces the same quantity while charging a higher price.             d. all surplus goes to the producer.             e. it leads to a smaller producer surplus but greater consumer surplus. 2. The demand curve of a monopolist typically...
QUESTION 10 If unskilled labor and capital are substitutes, the price of unskilled labor decreases when...
QUESTION 10 If unskilled labor and capital are substitutes, the price of unskilled labor decreases when the price of capital increases. the cross-elasticity between unskilled labor and capital is positive. the price of capital is increasing. demand for unskilled labor increases when the price of capital decreases. QUESTION 11 The imposition of a minimum wage on a competitive labor market will likely create unemployment as some people enter the labor market while some firms reduce the quantity of labor they...
3. Suppose you operate a single price monopoly in the area for hydroelectric power. Answer the...
3. Suppose you operate a single price monopoly in the area for hydroelectric power. Answer the following questions in relation to your company and monopoly market structure. Given the following information for your company Demand: P=300-5Qd Marginal Revenue: P=300-10Qd Marginal Cost P=-12.5+2.5Q a) Plot each curve on the same graph and show how the monopolist determines the price that maximizes profit. What price will this monopolist charge? b) If the ATC for the price and quantity determined in a) is...
1) Xavier opens up a lemonade stand for two hours. He spends $10 for ingredients and...
1) Xavier opens up a lemonade stand for two hours. He spends $10 for ingredients and sells $60 worth of lemonade. In the same two hours, he could have mowed his neighbor’s lawn for $40. What is Xavier’s accounting profit? What is Xavier’s economic profit? 2) A commercial fisherman notices the following relationship between hours spent fishing and the quantity of fish caught: Hours                   Quantity of fish (in pounds) 0 10 18 24 28 30 What...
Course Project Week 4 For this next part of the project you will build the Income...
Course Project Week 4 For this next part of the project you will build the Income Statement and Balance Sheet for the Bike Repair & Maintenance Shop (BRMS) for 2018. Use the information below and add another sheet to your Excel Workbook. BRMS Information for 2018 In 2017, the repair shop was opened in October and ended the year with a ($10,500) operating loss. Supply Inventory of parts & supplies maintained $3,000 Replacement parts are ordered as they are used....
17. Suppose you receive a 25% increase in your income. As a result of this, you...
17. Suppose you receive a 25% increase in your income. As a result of this, you double the amount of music festivals you attend each summer. Which of the following is correct? Multiple Choice a.Music festivals are a normal good and income elasticity of demand equals 4. b.Music festivals are an inferior good and income elasticity of demand equals -4. c.Music festivals are a normal good and income elasticity of demand equals 0.25. d.Music festivals are an inferior good and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT