E202Exam3.10 - Chapter 13 7. (10 pts) Stone, Inc., owns a...

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Chapter 13 7. (10 pts) Stone, Inc., owns a clothing factory and hires workers in a competitive labor market to stitch cut denim fabric into jeans. The fabric required to make each pair of jeans costs $10. The company’s weekly output of finished jeans varies with the number of workers hired, as shown in the following table: Number of workers Jeans (pairs per week) MP (pairs per worker) VMP ($/wk) 00 1 25 25 750 2 45 20 600 3 60 15 450 4 72 12 360 5 80 8 240 6 85 5 150 a. If the jeans sell for $40 a pair, and the competitive market wage is $250 per week, how many workers should Stone hire? How many pairs of jeans will the company produce each week? Answer : After deducting the $10 cost of the fabric, the company receives $30 from the sale of
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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