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Consider a firm that produces dietary supplements. It has plants in Indiana and in California. Consider the following information: *Note that this includes all supplements
Consider a firm that produces dietary supplements. It has plants in Indiana and in California. Consider the following information: *Note that this includes all supplements that the firm produces Plant Size A Indiana Plant California Quantity of workers Total Supplements Quantity of Workers Total Supplements 0 0 0 0 1 5000 1 10000 2 12000 2 21000 3 20000 3 31000 4 27000 4 38000 5 32000 5 44000 6 36000 6 46000 7 38000 7 46000 Plant Size B Indiana Plant California Quantity of workers Total Supplements Quantity of Workers Total Supplements 0 0 0 0 1 10000 1 11000 2 24000 2 45000 3 40000 3 65000 4 54000 4 76000 5 64000 5 94000 6 72000 6 100000 7 76000 7 90000 a. Consider Plant size A in Indiana. Where do diminishing returns start? b. Suppose the average price of the supplements is $10 per bottle and the wage in Indiana is $40,000 per year and the wage rate in California is $60,000 per year. How many workers should the company hire in each plant in Plant Size A? c. Suppose the wage rate in California increases to $100,000. How many workers should it
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