ers responds as a resulr of ing instructors he hires, the more driving lessons h
ID: 1141576 • Letter: E
Question
ers responds as a resulr of ing instructors he hires, the more driving lessons he can sell. But because he owns a limited number of training automobiles, each additional driving instruc- tor adds less to Jameel's output of driving lessons The accompanying table shows Jameel's production unction per day. Each driving lesson can be sold at $35 per hour 4. Jameel runs a driver education school. The more driv- 7 Quantity of labor Quantity of driving (driving instructors) 0 lessons (hours) 0 8 15 21 26 30 3 4 5 6 Determine Jameel's labor demand schedule (his demand schedule for driving instructors) for each of the following daily wage rates for driving instructors: $160, $180, $200, $220, $240, and $260. 5. Dale and Dana work at a self-service gas station and convenience store. Dale opens up every day, and Dana arrives later to help stock the store. They are both paid the current market wage of $9.50 per hour. But Dale feels he should be paid much more because the rev- enue generated from the gas pumps he turns on every morning is much higher than the revenue generated by the items that Dana stocks. Assess this argument.Explanation / Answer
Solution:
Quantity of Labor (Driving Instructors
Quantity of Driving Lessons (Hours)
MPL
MRP
0
0
1
8
8
280
2
15
7
245
3
21
6
210
4
26
5
175
5
30
4
140
6
33
3
105
When driving instructors daily wage rate equals $160, Jameel should hire 4 instructors: the fourth instructor has a marginal revenue product of $175, which exceeds the rate of wages; however the fifth instructor have a marginal revenue product of $140, which is comparatively less to the rate of wages. By same reasoning for the other wage rates, the demand schedule of Jameel’s for labor is as shown in the below table.
Daily Wage Rate (in $)
Quantity of Labor Demanded (Driving Instructors)
160
4
180
3
200
3
220
2
240
2
260
1
2) The argument of Dale is incorrect because the proprietor of the business will hire workers until the hourly value of the marginal product of the last person hired is $9.50. This indicates that all other workers hired will have an hourly value of the marginal product exceeding $9.50 however will be paid a wage equal to $9.50. Thus any worker who opens the station, irrespective of whether it is Dale or Dana, will have a value exceeding the value of marginal product compared to the second person to report for work
Quantity of Labor (Driving Instructors
Quantity of Driving Lessons (Hours)
MPL
MRP
0
0
1
8
8
280
2
15
7
245
3
21
6
210
4
26
5
175
5
30
4
140
6
33
3
105
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.