Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Austan Goolsbee, Steven Levitt, Chad Syverson

3rd Edition

1319105564, 978-1319105563

More Books

Students also viewed these Economics questions

Question

A greater tendency to create winwin situations.

Answered: 1 week ago

Question

Improving creative problem-solving ability.

Answered: 1 week ago