Question
U.S. logging companies employ Canadian loggers to cut Maine trees. When the federal government restricted the number of temporary workers permitted in the UnitedStates, the
U.S. logging companies employ Canadian loggers to cut Maine trees. When the federal government restricted the number of temporary workers permitted in the UnitedStates, the logging companies had to use fewer Canadian loggers. Unable to find U.S. workers willing to cuttrees, the logging companies had to lay off workers in complementary operationsfor example, truck drivers. Suppose that a logging company needs exactly one truck driver for each six loggers it employs. Each truck driver and team of six loggers can cut and transport80,000 tons of wood per day. What is the marginal revenue product function fortruckers, and how does the function depend on the number of loggersemployed?
Assume the logging industry is competitive. Let p be the price of a ton ofwood, L be the number of loggersemployed, and T be the number of truck drivers employed.
Part I
The marginal revenue product function fortruckers, MRPT, is
A.
MRPT=p80,000 if LT and zero otherwise.
B.
MRPT=p80,000 if (L/6)T and zero otherwise.
C.
MRPT=p80,000 if T(L/6) and zero otherwise.
D.
MRPT=80,000(L/6)T if (L/6)T and 80,000(L/6) otherwise.
E.
MRPT=80,000 if (L/6)T and zero otherwise.Show that with a decrease in the number ofloggers, a logging company would hire fewer truckers.
Part II
Suppose (L/6)=T initially. For every six fewer loggershired, the company will hire ........... fewer truckdriver(s). (Enter your response as aninteger.)
NOTES:
I have the answer for part I. I need answer to part II. Please explain your solution. Thanks!
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