Rosenberg (2004) reports the invention of a new machine that serves as a mobile station for receiving and accumulating packed flats of strawberries close to where they are picked, reducing workers time and burden of carrying full flats of strawberries. A machine-assisted crew of 15 pickers produces as much output, q*, as that of an unaided crew of 25 workers. In a 6-day, 50-hour workweek, the machine replaces 500 worker- 2 hours. At an hourly wage cost of $10, a machine saves $5,000 per week in labor costs, or $130,000 over a 26-week harvesting season. The cost of machine operation and maintenance expressed as a daily rental is $200, or $1,200 for a six-day week. Thus, the net savings equal $3,800 per week, or $98,800 for 26 weeks. a. Draw the q* isoquant assuming that only two technologies are available (pure labor and labor-machine). Label the isoquant and axes as thoroughly as possible. b. Add an isocost line to show which technology the firm chooses (be sure to measure wage and rental costs on a comparable time basis). c. Draw the corresponding cost curves (with and without the machine), assuming constant returns scale, to and label the curves and the axes as thoroughly as possible
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