A company supplies local retailers with deck chairs to sell. The company has a l

Question

A company supplies local retailers with deck chairs to sell. The company has a large pool of both experienced and inexperienced wood workers from which to hire. You will find below the total productivity of each worker type as they are added to the production process Experienced works earn $20 per hour while workers with no experience earn $10 per hour. The company plans to hire six new workers for the summer. How many of each worker type should be hired for the summer? Show your work and explain your answer. 4. Exp No Exp MPMPMP/P MP/P 0 2 3 4 5 6 0 100 180 240 290 330 360 0 80 150 200 240 270 300

Explanation / Answer

The workers will be selected on the basis of Marginal product of labor per unit of price (MP/P) as shown on the basis of above table.

The highest MP/P is 8 and it is with non-experience worker.

The second highest MP/P is 7 and it is with non-experience worker.

The third highest MP/P is 5 and it is with one experienced and another non-experience worker.

The fourth highest MP/P is 4 and it is with one experienced and another non-experience worker.

On the basis of above MP/P analysis, 4 non-experienced and 2 experienced worker will be hired.

No. Exp No Exp MP (Exp) MP (No Exp) MP / P (Exp) MP / P (No Exp) 0 0 0 1 100 80 100 80 5 8 2 180 150 80 70 4 7 3 240 200 60 50 3 5 4 290 240 50 40 2.5 4 5 330 270 40 30 2 3 6 360 300 30 30 1.5 3

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