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In: Economics

2. Walmart can use either self-service check out machines or cashiers to process customer purchases. For...

2. Walmart can use either self-service check out machines or cashiers to process customer purchases. For Walmart, self-service checkout machines and cashiers are perfect substitutes. Suppose that self-service checkout machines can process the purchases of 100 customers per hour and that a cashier can process the purchases of 60 customers per hour. Suppose that the price of operating a self-service checkout machine is 20 dollars per hour and that cashiers are paid an hourly wage of 10 dollars per hour. Answer the following questions:

a) Write down Walmart’s production function for processing customers’ purchases.

b) What is Walmart’s demand for cashiers given the production technology and input prices?

c) What is Walmart’s demand for self-service check out machines given the production technology and input prices?

d) How much will it cost Walmart to process the purchases of 400 customers in an hour?

e) Suppose the minimum wage for workers is increased to 15 dollars per hour. What is the cost to Walmart of processing 400 customers in a hour?

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Expert Solution


Rahul Sunny answered 7 months ago
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