Campbell Motors is an auto dealership that specializes in the sale of station wagons and light trucks. Because of its reputation for quality and service, Campbell has a strong position in the regional market, but demand remains somewhat sensitive to price. While evaluating the new models, Campbell's marketing consultant has come up with the following demand curves:
Truck Demand = 500  18 (Truck Price in thousands)
Wagon Demand = 400  11 (Wagon Price in thousands)
The dealership's unit costs are $20,000 for trucks and $25,000 for wagons. Each truck requires three hours of prep labor, and each wagon requires two hours of prep labor. The current staff can supply 250 hours of labor.
a. Determine prices at which Campbell Motors can maximize the profit it generates from combined sales of trucks and wagons.
b. What is the marginal value of the current staff's labor hours?