Reference no: EM131527739

Yolanda von Sweeny owns an art factory. She is thinking of expanding her exports of large-size paintings of Italian cityscapes. She has had little difficulty recruiting new artists to work a 40-hour week in the factory. The weekly wage is now 470 USD, and she thinks she can hire as many artists as she needs for that rate. An additional artist normally adds 90 paintings per week to the output of her factory. However, Yolanda was approached by a Hong Kong dealer, who is selling remarkable computerized robots that can closely duplicate the work of some of her current artists. A robot can paint 205 pictures per week and has a daily operating and financing cost of 175 USD per operating day. Regardless of whether she uses the robots or additional artists, Yolanda plans to operate the factory only 5 days per week.

a) Determine whether Yolanda should consider buying the robots.

b) Given the current daily cost of robots, what artist wage would make Yolanda indifferent between employing the robots and hiring more artists?