ECO 202 Spring 2011 Extra Credit Doctor Nice Guy-1

# ECO 202 Spring 2011 Extra Credit Doctor Nice Guy-1 - Name...

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Name: __________________________ Date: _____________ 1. Barry's Brewpub is considering hiring more brewmasters (they already employ several). A pint of brew sells for \$3. The current market wage of a brewmaster is \$150 per day. Barry's Brewpub will hire another brewmaster only if they believe the new brewmaster will: A) produce the same number of pints per day as the last brewmaster hired. B) produce 50 or more pints per day. C) raise total production to 50 or more pints per day. D) increase the marginal product by \$150 per day. 2. Barry's Brewpub is considering hiring more brewmasters (they already employ several). The current market wage for a brewmaster is \$120. The average brewmaster produces 40 pints per day, but Barry expects the next brewmaster hired to produce only 20 pints per day. Barry's Brewpub will hire another brewmaster only if: A) a pint of brew sells for \$3. B) the new brewmaster can produce 40 pints. C) a pint of brew sells for \$2. D) a pint of brew sells for \$6 or more. 3. Maria operates a persimmon orchard in southeastern Oklahoma. She pays her workers \$248 per week to pick and process persimmons, and she sells her persimmons for \$6 per bushel. If she adds one more worker and that worker can pick and process 44 bushels per week, what will be the profit for Maria from hiring that worker? A) \$0 B) \$16 C) \$264 D) \$544 4. Mary is considering hiring another worker in an assembly line for stereo speakers. Mary knows the average product of labor is 15 speakers per day. She also believes that the next worker hired will produce an extra 12 speakers per day. A speaker sells for \$10 each. Mary should hire another worker: A) only if the new worker's marginal product is 12 or more. B) only if the new worker's daily wage is \$150 or less. C) only if the new worker's daily wage is \$120 or less. D) since the marginal product is below the average product. Page 1

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Use the following to answer questions 5-9: 5. (Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn. Assume the wage rate for workers is \$130 and the price per unit of corn is \$10. The table shows Laura's production function. Suppose Laura is currently employing two workers. If she adds the third worker, her profits will: A) increase by \$79. B) decrease by \$51. C) decrease by \$109. D) increase by \$80. 6. (Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn. Assume the wage rate for workers is \$125 and the price per unit of corn is \$10. The table shows Laura's production function. To maximize profits Laura should employ ________ workers. A) two B) three C) four D) six 7. (Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn. Assume the wage rate for workers is \$125 and the price per unit of corn is \$10. The
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ECO 202 Spring 2011 Extra Credit Doctor Nice Guy-1 - Name...

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