Consider the workers at Live Happley Orchards whose production schedule for boxe
ID: 2496377 • Letter: C
Question
Consider the workers at Live Happley Orchards whose production schedule for boxes of apples is given by the following table: Labour Output (Boxes per day) (Number of workers) 2 3 4 5 20 38 54 68 80 Live Happley is a small player in the apple business and has no individual effect on wages and prices. Suppose that the market wage for apple pickers is $200 per day. If the price of apples is $13 per box, Live Happley should hire Suppose that the price of apples rises to $15 per box, but the wage rate remains at $200 per day. Now Live Happley should hire Assuming that all apple-producing firms have a similar production schedule, an increase in the price of apples will cause the apple pickers toExplanation / Answer
1. AT $13 AND $200 WAGES THEY SHOULD HIRE 3 WORKERS TO EARN A MAXIMUM PROFIT
= 13*54 - 3*200 = 702 - 600 = 102.
2. AT $15 AND $200 WAGESTHEY SHOULD HIRE 4 WORKERS TO EARN A MAXIMUM PROFIT
= 15*68 - 4*200 = 1020 - 800 = 220.
3. INCREASE IN PRICE OF APPLES WILL CAUSE THE DEMAND FOR APPLE PICKERS TO RISE.
4. AT $15 AND $250 WAGES THEY SHOULD HIRE 2 WORKERS TO EARN A MAXIMUM PROFIT
= 15*38 - 2*250 = 570 - 500 = 70.