Carolyn owns a soda factory and hires workers in a competitive labor market to bottle soda. Her company's weekly output a bottle soda varies with the number of workers hired, as shown in the following table. Complete the following table before answering: Number Of WorkersCases Per WeekTotal Revenue$ per weekVMP$ per worker00  1200  2360  3480  4560  5600   A. If each case sells for $10 more than the cost of the materials used in producing it in the competitive market wage is $1000 per week how many workers should Carolyn hire? How many cases will be produced per week?_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________  B. Suppose the soda bottles union now sets a weekly minimum acceptable wage of $1500 per week. All the workers Carol hires belong to the union. How does the minimum wage affect Carol's decision about how many workers the hire?_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ C. If the wages again $1000 per week but the price of soda rises to $15 per case, how many workers will Carol hire now? Complete the table before answering. Number Of WorkersCases Per WeekTotal Revenue$ per weekVMP$ per worker00  1200  2360  3480  4560  5600   _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Question
Asked Nov 22, 2019
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Carolyn owns a soda factory and hires workers in a competitive labor market to bottle soda. Her company's weekly output a bottle soda varies with the number of workers hired, as shown in the following table. Complete the following table before answering:

 

Number Of Workers

Cases Per Week

Total Revenue

$ per week

VMP

$ per worker

0

0

 

 

1

200

 

 

2

360

 

 

3

480

 

 

4

560

 

 

5

600

 

 

 

A. If each case sells for $10 more than the cost of the materials used in producing it in the competitive market wage is $1000 per week how many workers should Carolyn hire? How many cases will be produced per week?

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

 

B. Suppose the soda bottles union now sets a weekly minimum acceptable wage of $1500 per week. All the workers Carol hires belong to the union. How does the minimum wage affect Carol's decision about how many workers the hire?

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

C. If the wages again $1000 per week but the price of soda rises to $15 per case, how many workers will Carol hire now? Complete the table before answering.

 

Number Of Workers

Cases Per Week

Total Revenue

$ per week

VMP

$ per worker

0

0

 

 

1

200

 

 

2

360

 

 

3

480

 

 

4

560

 

 

5

600

 

 

 

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Expert Answer

Step 1

In perfect competition, when the marginal product of labor is equal to the wage rate then profit-maximizing labor and output is attained.

Marginal cost is the additional cost incurred when one more unit of output is produced.

The value of marginal product of labor is determined by multiplying price with the marginal product of labor.

Step 2
  1. A) It is given that the price of soda is $10 and market wage rate is $1000.

The total revenue, total cost, marginal cost, marginal revenue product and profits can be calculated by using the following formulas:

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TC WagexNumber of labors TR-PricexQuantity МС-тC, -ТC. MRP-TR-TR1 Profits=TR-TC

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Step 3

The following table shows total revenue, total cost, mar...

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Case/Week TC Numbers TR МC MRP Profits of workers 0 0 0 0 0 200 2000 1 1000 1000 2000 1000 2000 3000 2 360 3600 1000 1600 1600 480 4800 5600 1000 1200 1800 4 560 4000 1000 800 1600 600 5000 6000 1000 400 1000

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