EBK ECONOMICS: PRINCIPLES AND POLICY
EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 8220100605932
Author: Blinder
Publisher: Cengage Learning US
Question
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Chapter 18, Problem 4DQ
To determine

The factors that determining the wages.

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Answer the given question with a proper explanation and step-by-step solution. Consider the Labor Economics Question. This will provide insight into the idea of the optimal number of workers and the value of the marginal product of labor.   If wages in the restaurant is $16.80 per hour and the price of a Hamburger is $4.20 and the production function for the workers is: Q = 6L – 0.25L2^2 a. How many workers should Your Restaurant employ during the lunch hour to maximize profits? (note—the value of the marginal product of labor and the marginal revenue product are the same) We maximize profits which are total revenues less total costs: b. Compute the maximum profit at Your Restaurant. (note—consider that profit involves Total Revenue and Total Costs). c. Compute the profit created if You hire an additional worker. Explain why it is or is not profit maximizing to hire an additional worker. d. Suppose instead that You wants to keep the lines as short as possible by maximizing production.…
Your enterprising uncle opens a sandwich shop that employs 7 people. The employees are paid $6 per hour, and a sandwich sells for $3. If your uncle is maximizing his profit, what is the value of the marginal product of the last worker he hired? What is that worker's marginal product?
Explain why labor productivity and real hourly compensation track so closely over time.
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