A firm hires two doctors to help injured workers. The firm values fixing each injured worker at $72. Ashley’s marginal cost of allocating effort to the helping injured workers is 6N, where N is the number of workers helped per day. Brennan’s marginal cost is 8N. a) If the firm pays piece-rates, what will be each worker’s daily wage? How many workers do Ashley and Brennan each help in a day? b)Suppose the firm pays a time rate of $600 per day and fires any doctor who does not help at least 8injured workers per day. How many injured workers will each doctor help in a day?

A firm hires two doctors to help injured workers. The firm values fixing each injured worker at $72. Ashley’s marginal cost of allocating effort to the helping injured workers is 6N, where N is the number of workers helped per day. Brennan’s marginal cost is 8N. a) If the firm pays piece-rates, what will be each worker’s daily wage? How many workers do Ashley and Brennan each help in a day? b)Suppose the firm pays a time rate of $600 per day and fires any doctor who does not help at least 8injured workers per day. How many injured workers will each doctor help in a day?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 1.9CE

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