Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.4IP
To determine
The inefficiency created by higher-wage rate for night shift employees.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Goleta Brewing Company hires only two types of labor, managers and brewing assistants (denoted M and B, respectively). GBC has the following Cobb-Douglas production function F(M,B) = M.5 B.5 and wants to produce 10 barrels of pale ale this week. If the wage of managers is $50 per hour and the wage of brewing assistants is $10 per hour, how many managers and brewing assistants should the firm hire (round to nearest whole number)? How does your answer change when the wage of managers decreases to $30 per hour and the wage of brewing assistants remains constant. Is this result consistent with your intuition?
Weiwei gets a part-time job in high school that pays $5 per hour with flexible hours. Shechooses to work 6 hours per week, earning $30 per week. After a while, her job reduces herpay to $4 an hour. In response, she cuts back to working 5 hours per week, earning only$20 per week. Weiwei’s parents feel bad about the pay cut, and decide to give her a weeklyallowance, in cash, to make up for it. If they want to get her back to her old utility level,how much should they give her and why?
(Select one answer from below) :
(a) $10: that is her total amount of lost earnings(b) Between $10 and $6: that is the income effect minus the substitution effect(c) Between $10 and $6: leisure is a luxury good for high school students(d) $6: that is how much she would have lost if she kept working 6 hours(e) $5: the substitution effect offsets the change in labor hours(f) Between $6 and $0: she will substitute away from labor at the old bundle(g) Between $5 and $0: a pay cut is like a negative in-kind…
Marie Johnston is a manager at a cell phone store and is making hiring decisions. The number of cell phones her store sells per day depends on the number of workers she hires, as shown in the accompanying table. She sells each cell phone for $300
Chapter 2 Solutions
Managerial Economics: A Problem Solving Approach
Knowledge Booster
Similar questions
- A large architectural firm has just landed a contract to build a hospital. Seven architects currently work 40 hours per week in this firm, and all are available to work full-time on this project. The managers estimate that they need 400 architect-hours per week for 20 weeks to complete this project. Architects earn $500 per 40-hour week. Suppose that there is a fixed cost of hiring an architect of $2,000. (This cost reflects the advertising costs, interviewing costs, and so forth.) Part 2 The firm's current architects are willing to work overtime to complete this project if they receive 1.5 times their usual wage rate for any hours in excess of 40 hours per week. In this situation, the total overtime wages the managers would pay for the project will be $enter your response here.arrow_forwardA large architectural firm has just landed a contract to build a hospital. Nine architects currently work 40 hours per week in this firm, and all are available to work full-time on this project. The managers estimate that they need 400 architect-hours per week for 20 weeks to complete this project. Architects earn $500 per 40-hour week. Suppose that there is a fixed cost of hiring an architect of $2,000. (This cost reflects the advertising costs, interviewing costs, and so forth.) The firm's current architects are willing to work overtime to complete this project if they receive 1.5 times their usual wage rate for any hours in excess of 40 hours per week. In this situation, the total overtime wages the managers would pay for the project will be $ 18,000 Alternatively, the firm can handle this project by hiring new workers (for 20 weeks only) and having all architects work 40 hours per week. The number of new architects the firm would need to hire is 1. Comparing the costs suggests that…arrow_forwardCalculate the Marginal Product (MP) at each input level. If the price of printer is $100 each, calculate the Value of the Marginal of labor (VMPL). If the wage rate (per week) is $1800 , how many workers will be employed? If the firm decides to hire 14 workers, what is the maximum wage the firm would be willing to pay?arrow_forward
- The Aguiar et al. (2017) study concluded that a revolution in the video game market-better games at a lower price-dramatically increased the amount of time young men spend playing video games and shifted their labour supply curve. In 2015, young men played video games for 3.2 hours per week on average. From 2000 through 2015, average annual hours of work for men aged 21-30, excluding full time students, dropped by 10% . Suppose the labour demand function is L = 200-w, and the supply curve is L = 50 + w-2V, where L is the hours worked, w is the wage, and V is a measure of the quality of video games. By how much do the equilibrium hours and wage vary as V increases?arrow_forward2-4 France’s Labor Unions Force Early Closing Times In 2013, France’s labor unions won a case against Sephora to prevent the retailer from staying open late and forcing its workers to work “antisocial hours.” The cosmetics store does about 20% of its business after 9 P.M., and the 50 sales staff who work the late shift are paid an hourly rate that is 25% higher than the day shift. Many of them were students or part-time workers, who were put out of work by these new laws. Identify the inefficiency, and figure out a way to profit from it.arrow_forwardFor Questions 13 and 14, Consider that Kim is a Nurse at a hospital in Atlanta and in 2010 she made an annual salary of $30,000. She has gotten several performance raises and one promotion over the years and in 2019 she earned $46,000 for the year. The Price Index representing her buying power in 2010 was 100 and in 2019 it is 164. It is now 2020 and Kim decided to keep working at that hospital and has worked another year and gotten a raise and another promotion and now her salary is $54,000 per year and the 2020 price index is now 171. NOW, what is the approximate value of her buying power now expressed in 2010 dollars? Question 14 options: $32,927 $26,900 $29,466 $31,579arrow_forward
- A manager hires a labor and rents capital equipment in a very competitive market. Currently the wage rate is Gh₵ 2 per hour and capital is rented at Gh₵ 5per hour, the unit price of the product is Gh₵ 0.25 and total cost is1000. Suppose the firm’s production is as follows: Q =14K⁰L⁰+10 Required What is the amount of labor and capital the firm should employ in order to maximize profit. What is the maximum profit.arrow_forwardA craft chocolate producer considers hiring one extra worker in production. Currently, the shop is selling 200 chocolate bars per day at a price of $6. With one extra worker, the manager estimates that they would be able to increase the output to 250 chocolate bars per day and that they would need to lower the price to $5.50 in order to sell them. The daily salary of this new employee would be the same as for the existing ones: $150. What should the manager do? Group of answer choices Reduce the number of workers working in his chocolate place Increase its selling price Turn down the new worker and maintain the same number of employees Increase the salary of all employees Hire the extra workerarrow_forwardAmy is a college student who lives in Dallas and does some consulting work for extra cash. At a wage of $25 per hour, she is willing to work 6 hours per week. At $35 per hour, she is willing to work 16 hours per week. Amy is a college student who lives in Dallas and does some consulting work for extra cash. At a wage of $25 per hour, she is willing to work 6 hours per week. At $35 per hour, she is willing to work 16 hours per week. Using the midpoint method, the elasticity of Amy's labor supply between the wages of $25 and $35 per hour is approximately (.03, .37, 2.73, or 11), which means that Amy's supply of labor over this wage range is (elastic or inelastic).arrow_forward
- Planes frequently push back from the gate on time, but then wait 2 feet away from the gate until it is time to queue up for takeoff. This increases fuel consumption and increases the time that passengers must sit in a cramped plane awaiting takeoff. The following table shows the pay schedule for the flight crew. Pay Flight Attendant Captain First Officer Per diem $3 $3 $3 Holding pay per hour $20 $20 $20 Hourly wage (after push back) $38 $184 $50 Per diem pay indicates how much the flight crew earns once it checks into the airport. Holding pay indicates how much the flight crew earns after it loads the plane. Hourly wage indicates how much the flight crew earns after it pushes back from the gate and turns on the beacon. In this scenario, who does not have an incentive to push back from the gate as early as possible? Check all that apply. Captain First officer Flight attendants Passengers True or False: Allowing the airline…arrow_forwardPlanes frequently push back from the gate on time, but then wait 2 feet away from the gate until it is time to queue up for takeoff. This increases fuel consumption and increases the time that passengers must sit in a cramped plane awaiting takeoff. The following table shows the pay schedule for the flight crew. Pay Flight Attendant Captain First Officer Per diem $3 $3 $3 Holding pay per hour $20 $20 $20 Hourly wage (after push back) $38 $184 $50 Per diem pay indicates how much the flight crew earns once it checks into the airport. Holding pay indicates how much the flight crew earns after it loads the plane. Hourly wage indicates how much the flight crew earns after it pushes back from the gate and turns on the beacon. In this scenario, who has an incentive to push back from the gate as early as possible? Check all that apply. First officer Passengers Captain Flight attendants True or False: Reducing crew members' hourly…arrow_forwardA bottling company uses two inputs to produce bottles soft drink sludge: bottling machines (K) and workers(L). The machine costs $1000 per day (r) to run and the workers are paid $200 per day (w). At the current level of production, the marginal product of the machine is an additional 200 bottles per day (MPK), and the marginal product of labor is 50 bottles per day (MPL) State the rule for determining the cost- efficient combinations of inputs (K & L) for the production of soft drinks. Given r=$1000 per day, w=$200 per day, (MPK)= 200 bottles, and (MPL)= 50 bottles, is the company operating cost efficiently based on the above rule? If yes, why, if not why? What must the company do to move toward cost efficient operation? Hint: use more labor or more machines and why?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education