Consider the following information for a T-shirt manufacturing firm that can sell as many T-shirts as...

Consider the following information for a T-shirt manufacturing firm that can sell as many T-shirts as it wants for $10 per shirt.

# of Workers	# of shirts produced per day	MPI	TR	MRPI
0	0
1	40
2	85
3	135
4	195
5		50
6	285
7	315
8				200
9				100

a) Fill in the missing parts of the above table.

b) Verify that MRPl can be calculated in two ways: by change in TR and MPl times product price. If this firm must pay a rate of $285 per day, how many workers would be hired? Briefly explain.

c) Determine the highest wage rate necessary to hire 8 workers. Explain your answer.

d) Suppose the firm adopts a new technology that doubles output at each level of employment and that the price of shirts stays the same. Assume the wage rate is $285 per day. What would be the effect on the new technology on employment? Explain.

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Expert Solution

Rahul Sunny answered 1 year ago

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