A new coffee shop opens and to maximize profit it hires 5 workers at the competitive wage
Question:
A new coffee shop opens and to maximize profit it hires 5 workers at the competitive wage rate. The price of a cup of coffee is $4 and the value of marginal product of workers in the coffee shop is $12 an hour.
If the price of a cup of coffee rises from $4 to $5 and the coffee shop continues to hire workers at the competitive wage rate, explain how the value of marginal product and number of workers hired will change.
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The firm will continue to maximize its profit by hir...View the full answer
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