Radioco manufactures two types of radios. The only scarce resource that is needed to produce radios is labor. At present, the company has two laborers. Laborer 1 is willing to work up to 40 hours per week and is paid $5 per hour. Laborer 2 will work up to 50 hours per week for $6 per hour. The price as well as the resources required to build each type of radio are given in the Table. Letting xi be the number of Type i radios produced each week, Radioco should solve the following LP: a) For what values of the price of a Type 1 radio would the current basis remain optimal? b) For what values of the price of a Type 2 radio would the current basis remain optimal?

Radioco manufactures two types of radios. The only scarce resource that is needed to produce radios is labor. At present, the company has two laborers. Laborer 1 is willing to work up to 40 hours per week and is paid $5 per hour. Laborer 2 will work up to 50 hours per week for $6 per hour. The price as well as the resources required to build each type of radio are given in the Table. Letting xi be the number of Type i radios produced each week, Radioco should solve the following LP: a) For what values of the price of a Type 1 radio would the current basis remain optimal? b) For what values of the price of a Type 2 radio would the current basis remain optimal?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter16: The Markets For Labor, Capital, And Land

Section: Chapter Questions

Problem 13P

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