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Carla H is considering buying a few tablet devices for her bakery so customers can place orders for her signature cupcakes on their own, straight
Carla H is considering buying a few tablet devices for her bakery so customers can place orders for her signature cupcakes on their own, straight from the counter.
Reason: She fears the $7.25 an hour that she currently pays her 10 customer service employees, could rise, perhaps to $9 an hour under a pledge by President Obama earlier this month.
Key Facts for the Questions
- Ms. H believes that the customer-ordering process has to be automated, in order to remain profitable with self-serving tablets
- The combined cost of two tablets, plus a customized application for displaying products with descriptions and processing orders range from $5,000 - $15,000 to implement
- Some businesses see a promise in selling technologies to small businesses to help do-away with low-wage workers
- A $22,000 six-foot-tall robot with flexible arms, a face screen, and rolling pedestals replaces the low-wage workers at small manufacturing firms that can't afford traditionally automated robots that require someone to program it
- Consider the cost minimization model. In this case, assume that the two inputs are labor (X axis) and robots (Y axis). Draw a graph of an initial cost-minimizing position which depicts the cost-minimizing amounts of labor and robots capable of producing the desired output, Q.
- Label your axes, and intercepts clearly (assume that r =Price of a robot, w = price of Labor, and C is total cost, R=quantity of Robots, and L =quantity of Labor). Draw on the same graph what would happen if the wage rose (say, due to the increase in the minimum wage).
- Describes what happens in the graph. Is the firm still able to produce the same desired output? Explain.
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