Suppose that McDonald\'s hires workers at the minimum wage and that the minimum
ID: 1201569 • Letter: S
Question
Suppose that McDonald's hires workers at the minimum wage and that the minimum wage is increased from $7.50 per hour to $9.00 per hour. Assuming McDonald's is a competitive firm, what would the effect of this change on McDonald's? Circle or identify all that are correct. a. The number of workers hired by McDonald's would decrease. b. The number of workers hired by McDonald's would remain the same, but costs would increase. c. The marginal cost of producing burgers by McDonald's would increase. d. The marginal product of McDonald's workers would be higher. e. None of the above is correct. 4. Suppose that a disease strikes chicken farmers killing a very large number of chickens, and as a result KFC doubles the prices of its sandwiches and dinners. What is the expected effect in the market for McD's burgers? Circle or identify all that are correct. a. The demand for McD's burgers will increase. b. The price of McD's burgers will increase. c. The demand for workers by McD's will increase. d. The marginal revenue product of workers hired by McD's will be higher. e. None of the above is expected to happen.Explanation / Answer
Answer 3 : As the price of per unit of labor increases which will lead to an increase in toatl cost of producing burger. When gtotal cost of producing burger will increase it will lead to an increase in marginal cost of the producing burger.
Hence the answer will be c.
Answer 4: When kfc increases the price of the burgers it will lead to the decrease in demand for kfc burger and due to increased price some customers will shift their demand toward mc donalds.
Hence due to shift in demand of the customer from kfc to mc donalds the demand for Mc D's burger will increase. So the answer will be a.