A firm hires two workers to assemble bicycles. The firm values each assembly at

Question

A firm hires two workers to assemble bicycles. The firm values each assembly at $12. Charlie's marginal cost of allocating effort to the production process is MC 4N. where Nis the number of bicyeles assembled per hour. Donna's marginal cost is MC = 6N If the firm pays piece rates what will be cach worker's hourly wage? b. Suppose the firm pays a time rate of S15 per hour and fires any worker who does not assemble at least 15 bieyeles per hour How many bieycles will each worker assemble in an cight-hour day?

Explanation / Answer

ANS.

a - Charlie's hourly wage = 4 x 12 = $48

Donna's hourly wage = 6 x 12 = $72

Ans b - Charlie's daily production = 4 x 8 = 32

Donna's daily production = 6 x 8 = 48

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