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nakungth nakungth
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6 years ago
Sarah's Pretzel Plant produces pretzels according to the function y(K, L) = 100  .  K is the number of ovens, and L is the number of labor hours Sarah uses to produce her pretzels.  At the moment, Sarah uses 9 ovens.  Also, she plans to hire 64 labor hours.  Sarah can sell each unit of pretzels produced for $3.50.  Fill in the table below.  If Sarah increased her use of labor hours to 65, would the value of the marginal product of labor exceed the wage rate of $8.50?   

y(9, L)   L   MPL =     $3.50  MPL
   64      
   65
Textbook 
Microeconomics

Microeconomics


Edition: 8th
Author:
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wrote...
#1
6 years ago
y(9, L)   L   MPL =     $3.50  MPL
1,200   64   6.25   $21.88
1,206.22   65   6.19   $21.66

If Sarah uses 65 hours of labor, the value of the marginal product of the 65th labor hour exceeds the $8.50 cost of labor.  This suggests that if Sarah goes beyond 64 units of labor hours, her profits will be higher.
nakungth Author
wrote...
#2
6 years ago
A+ answer, ty
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