06/25/18 As manager of a local ice cream shop, you must determine how many worke

Question

06/25/18 As manager of a local ice cream shop, you must determine how many workers to hire to serve ice cream at this Saturday's big parade Each cup of ice cream can be sold for $6 The table below shows each worker's marginal product (MP) and the value of their marginal product (VMP). Compute the values of the missing entries. Quantity Quantity of labor (workers) of ice Marginal Product Value of Marginal Product cream (cups) 0 110 200 270 300 0 110 $660 90 30 $180 $120 3 OF 16QUESTIONS COMPLETED ?lype h re to t earch

Explanation / Answer

Quantity of labor Quantity of ice creams Marginal product Value of marginal product (Workers) (cups) MP *$6 0 0 - - 1 110 110 660 2 200 90 540 3 270 70 420 4 300 30 180 5 320 20 120 6 330 10 60 the value of marginal product (VMP) is the resource's marginal product multiplied by the product price. Part 2 a) Diminishing returns as MP falls when output increases. b) Two workers. Since each shift cost $200 then two shifts will cost $200 x 2=$400. This is less than value of marginal product.

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