Question
Consider the craft beer industry, with brewers that supply craft beer to local breweries (firms). Each worker (brewer) is professional in brewing a distinct style
Consider the craft beer industry, with brewers that supply craft beer to local breweries (firms). Each worker (brewer) is professional in brewing a distinct style of beer. There are 24 beer styles. In other words, the beer style wheel is like a 24-hour clock. Breweries enter the market with a specific beer style requirement for brewers. If a brewer's beer style does not match the brewery's requirement, the brewer must spend money on adjusting the recipe to close the gap. The cost of doing so is $5 for each unit of beer style shift. For example, to go from style #3 to style #2, the cost is $5; to go from style #5 to style #2, the cost is $15. Each brewery hires 4 brewers. There are two cities in the region: Lagersville has 4 brewers and Alesburg has 24. The gross wage of a brewer is $100. Assume that brewers are evenly distributed around the beer style wheel.
Q1: Compute the average net wage of brewers for each town. Show steps for partial credit.
Q2: Is the average net wage of a brewer higher for Alesburg? Lagersville? Explain why.
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