3.3 In 2003, Circuit City Stores, Inc., replaced skilled sales representatives who earned up to $54,000 per year with relatively unskilled workers who earned $14 to $18 per hour (Carlos Tejada and Gary McWilliams, “New Recipe for Cost Savings:

Replace Highly Paid Workers,” Wall Street Journal, June 11, 2003). Suppose that sales representatives sold one specific Sony high-definition TV model.

Let q represent the number of TVs sold per hour, s the number of skilled sales representatives per hour, and u the number of unskilled representatives per hour. Working eight hours per day, each skilled worker sold six TVs per day, and each unskilled worker sold four. The wage rate of the skilled Exercises 266 CHApTEr 7 Costs workers was ws = $26 per hour, and the wage rate of the unskilled workers was wu = $16 per hour.