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In: Economics

Albany Bakery has the following production technology to produce bread: 1 worker produce 10 breads; 2...

Albany Bakery has the following production technology to produce bread: 1 worker produce 10 breads; 2 workers produce 18 breads; 3 workers produce 27 breads; 4 workers produce 34 breads; 5 workers produce 40 breads; 6 workers produce 45 breads. Each bread is sold for 5 dollars. If the company hires 3 workers, which of the following could be the nominal wage rate?

10

20

30

40

50

Solutions

Expert Solution

W TP MP VMPL=MP*Price
1 10
2 18 8 40
3 27 9 45
4 34 7 35
5 40 6 30
6 45 5 25

The company will hire up to the point where VMPL = Wage

so, the wage must be equal to 45 or more

= 50

Rahul Sunny answered 3 years ago
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