QUESTION 5 [12 MARKS]

Figure B-4 shows the relationship between the number of mechanics hired and the number of car repairs performed per day for a competitive profit maximizing car-repair shop.

Figure B-4

(a) What is the marginal product of the second mechanic?

[3 Marks]

(b) If the shop charges RM150 per repair, calculate the value of the marginal product of the second mechanic.

[3 Marks]

(c) If the shop pays each of its mechanics a wage of RM700 per day, then what is the marginal profit of the second mechanic?

[3 Marks]

(d) How much should the shop charge per repair to maximize profit when adding the second mechanic?

Number of Cars Repaired 18 17 15 12 8 0 1 2 3 4 5 Number of Mechanics