Computers and software cost $5,000 each and must be replaced each year. In a non-unionized labor market, workers are paid $20,00
0 per year. In these circumstances, the optimal choice from a cost perspective for the city government is _________.
1 answer:
Incomplete question, check attachment for full question.
Answer:
A
Explanation:
From the attachment we note that since the government wants to lower its cost the optimal option is A. The annual cost for choice A is
30 x $20,0000 + 50 ($5000)= $850,000
When compared to the other alternative choice it is the lowest.
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Answer:
Reduce employment because the wage paid is more than the marginal revenue product.
Explanation:
If the wage rate is $30, then the marginal cost for the eight worker is $30.
The marginal revenue product of the eight worker is given by the marginal product multiplied by the price per bushel:
Since the marginal revenue product of the eight worker is less than the marginal cost (MR < MC), the farmer should reduce employment.