Reference no: EM132185927
Question: Please solve the following problem. Here are the requirements:
1- For each step please provide a short explanation of the result(s) you display. Solutions without explanations will lose 50% of the credit.
2- The only source needed for doing this assignment is your textbook. You do not need to use reference or bibliography.
3- Please note no hand written paper will be accepted and a grade of zero will be assigned to the paper.
4- I am asking everyone to please submit the paper on time in Canvas and please do not email any paper after the deadline. They will not be accepted.
Problem: Jim owns a music school teaching guitar. The school has a small space and thus any additional teacher adds less to total production (MP is diminishing). Each guitar lesson costs $25/hour. Here is Jim's Production Function:
|
Labor
|
Q (quantity of lessons)
|
|
0
|
0
|
|
1
|
10
|
|
2
|
17
|
|
3
|
23
|
|
4
|
28
|
|
5
|
32
|
|
6
|
35
|
|
7
|
37
|
|
8
|
38
|
The daily wage rate for the teachers are: $75 , $100 , $125 , $150 , $175 , and $200.
A) Find Jim's labor demand schedule (Marginal Revenue Product) for each of the above wages.
B) If the price for guitar lessons goes up to $35/hour, Jim's demand for Labor will change. Find his new Labor demand at each of the same wage rates above.