Chapter 5 12. You were recently hired to replace the manager of the Roller Division at a major conveyormanufacturing firm, despite the manager's strong external sales record. Roller manufacturing is relatively simple, requiring only labor and a machine that cuts and crimps rollers. As you begin reviewing the company's production information, you learn that labor is paid $12 per hour and the last worker hired produced 80 rollers per hour. The company rents roller cutters and crimping machines for $15 per hour, and the marginal product of capital is 110 rollers per hour. What do you think the previous manager could have done to keep his job? 14. Recently, the Boeing Commercial Airline Group (BCAG) recorded orders for more than 15,000 jetliners and delivered more than 13,000 airplanes. To maintain its output volume, this Boeing division combines efforts of capital and more than 90,000 workers. Suppose the European company, Airbus, enjoys a similar production technology and produces a similar number of aircraft, but that labor costs (including fringe benefits) are higher in Europe than in the United States. Would you expect workers at Airbus to have the same marginal product as workers at Boeing? Explain carefully. 19. The A-1 Corporation supplies airplane manufacturers with preformed sheet metal panels that are used on the exterior of aircraft. Manufacturing these panels requires only five sheet metal- forming machines, which cost $500 each, and workers. These workers can be hired on an asneeded basis in the labor market at $9,000 each. Given the simplicity of the manufacturing process, the preformed sheet metal panel market is highly competitive. Therefore, the market price for one of A-1's panels is $80. Based on the production data in the accompanying table, how many workers should A-1 hire to maximize its profits? Sheet Metal-Forming Machines Workers Number of Panels Produced 5 0 0 5 1 600 5 2 1,000 5 3 1,290 5 4 1,480 5 5 1,600 5 6 1,680 Chapter 6 8. Discuss the impact of the following factors on the optimal method of procuring an input. a. Benefits from specialization. b. Bureaucracy costs. c. Opportunism on either side of the transaction. d. Specialized investments. e. Unspecifiable events. f. Bargaining costs. 19. Recently, a 10-year contract between Boeing Commercial Airplane Group (BCAG) and Thyssen Inc.a distributor of raw aluminumexpired. The contract, valued at $300 million when initially signed, stemmed from Boeing's desire in the late 1990s to reduce production bottlenecks resulting from supply shortages. Declines in the demand for commercial aircraft during the past decade led some analysts to challenge BCAG's wisdom in signing such a longterm contract. Do you share this view? Explain