MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 5, Problem 16PAA
To determine
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Bloomswood Hotel is situated in Forkland, a picturesque town in the mountain region of a country. Allen Grabos works as a gourmet chef at the hotel that caters mostly to tourists. In a conversation with his wife, Delia Grabos, Allen claims that he is underpaid. The hotel makes up to $500,000 per year but his annual salary is only around $28,000 a year. Delia, however, is of the opinion that since new hotels and inns are expected to open in Forkland, the salaries paid to hotel staff in the area should increase.
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Charles's Performance Pizza is a small restaurant in Houston that sells gluten-free pizzas. Charles's very tiny kitchen has barely enough room for the
two ovens in which his workers bake the pizzas. Charles signed a lease obligating him to pay the rent for the two ovens for the next year. Because of
this, and because Charles's kitchen cannot fit more than two ovens, Charles cannot change the number of ovens he uses in his production of pizzas in
the short run.
However, Charles's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday,
Charles lets them know how many workers he needs for each day of the week. In the short run, these workers are variable
inputs, and the
ovens are fixed
inputs.
Charles's daily production schedule is presented in the following table.
Fill in the blanks to complete the Marginal Product of Labor column for each worker.
Labor
Output
Marginal Product of Labor
(Number of workers) (Pizzas)…
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