2. (15) Suppose you manage a business that produces high end dog food. Your business produces 3,000 dog food cans per day, and can sell all cans at $2.00/can regardless of how much is produced. Your firm currently employs 20 workers, each of whom earns $15/hour and work 8 hours per day. Inputs, like the meat for the food and the metal for the can, cost $1.00/can. Your overhead expenses, including rent, property taxes, insurance, etc., which doesnotvary with the number of cans produced, equals $250 per day.

1. (3) Calculate your company's current daily profit.

You're considering whether to produce additional cans of dog food. In order to do so you would need to hire more workers, each of whom would be paid $15/hr. Material costs remain constant at $1.00/can. You determine that if you hire a 21^st employee, your firm would produce an additional 200 cans per day, and that the number of additional cans from each additional worker would be decreasing by 40 (so a 22^nd employee could produce an additional 160 cans per day, a 23^rd employee could produce an additional 120 cans per day, etc.).

1. (5) Calculate the marginal costs (change to total cost/change to output) associated with producing additional cans for employees 21 through 25. Note each worker works 8 hours/days.

c. (3) If you could still sell each can for $2.00, how many employees should you hire, how many additional cans should you produce, and what is your company's new daily profit?