ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 11, Problem 5.9P
To determine
The maximum weekly wage when a firm would hire an additional worker
Concept Introduction:
Full-time worker: An individual who works the minimum number of hours set by his/her employer.
Maximum weekly wage: This is a legal limit set by the government which defines how much income an individual can earn weekly.
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Question 16
When is it not in the best interest of a company to hire additional workers in the short run?
when the average product of labor is decreasing
when the firm is in Stage II of the production process
when the marginal revenue product equals zero
when the wage rate is equal to or greater than labor's marginal revenue product
H6.
Your mother owns and runs an arts and craft store, and the business is doing well. She would have otherwise been employed as a high school geography teacher making $80,000 a year or as an interior decorator making $68,000 a year. She owns the building in which her shop is located, which she could have rented out for $24,000 a year. Her annual revenue from the shop is $430,000 and she employs four workers, each of whom earns $30,000 a year. On average, she spends $206,000 per year traveling, purchasing, and shipping unique merchandise for resale at her store. Based on this information, do you think you should encourage her to return to teaching? Explain your advice with the help of calculations on her opportunity costs, accounting profit, and economic profit.
Question 5 Q5. Jessie, a pharmacist, is planning on opening her own pharmacy. Jessie Pharmacy is expected to generate yearly revenue of $500,000. Jessie will run the pharmacy herself on fulltime basis. Jessie’s alternative employment options are as follows: - Continue to work as a senior medical representative for $50,000 per year. - Accepts a research position in another company for $70,000 per year. Jessie expects to spend $350,000 per year on purchasing drugs and cosmetics for resale to her customers. She will also need to hire three employees: an assistant, an accountant and a custodian, for whom the total salaries to be paid are expected to be $48,000 per year. Jessie owns the building in which her pharmacy is supposed to be; however, she could rent the pharmacy-store space out for $42,000 per year. Calculate Jessie’s accounting profit and economic profit. In your opinion, should Jessie proceed with opening her own pharmacy? Justify your answer
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