Minimum wage have to be set so to the firm

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Reference no: EM1319551

Q. Assumed to low-skilled workers employed in clearing Woodland can each clear 1 acre per month if they are each equipped with a shovel, a machete also a chainsaw. Clearing 1 acre brings in $1000 in income. Each worker's equipment cost the worker's employer $150 per month to rent also each worker toils 40 hours per week for four weeks each month.

a. Illustrate what is the marginal income product of hiring one low-skilled worker to clear woodland for one month?

b. Elucidate how much income per hour does each worker bring in?

c. If the minimum wage were $6.20, would the income per hour in part b exceed the minimum wage? If so, elucidate how much per hour?

d. Now consider the employer's total costs. These include the equipment costs as well as a normal profit of $50 per acre. If the firm pays workers the minimum wage of $6.20 per hour Illustrate what will the firm's economic profit or loss be per acre?

e. At Illustrate what value would the minimum wage have to be set so to the firm would make zero economic profit from employing an additional low-skilled worker to clear woodland?

Reference no: EM1319551

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