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 2 years ago

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