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4. (10 pts.) Assume two changes to the fast food industry: 1) a new machine that allows customers to make their own orders at

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4. (10 pts.) Assume two changes to the fast food industry: 1) a new machine that allows customers to make their own orders at the counter has been introduced (rental rate = $25/hr), and 2) fast food works finally convinced congress to pass a law mandating a $15 minimum wage (w = $15/hr). As a manager of McDonalds, you are interested in your optimal input mix for taking food orders and your food order production is: Q = 25K - 10K - KL + 6L -0.2L a. What are the equations for APK and MPK? b. Assuming each McDonalds can only purchase 1 machine and that the average order from McDonalds is worth $5 (that is, P=$5), what is the optimal number of workers to hire? How much output is produced? What is the profit? c. Would you prefer 0, 1, or 2 machines? Explain.

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