Acme, Inc., supplies rocket ships to the retail market and hires workers to asse

Question

Acme, Inc., supplies rocket ships to the retail market and hires workers to assemble the components. A rocket ship sells for $30,000, and Acme can buy the components for each rocket ship for $27,000. Wiley and Sam are two workers for Acme. Sam can assemble 1/5 of a rocket ship per month and Wiley can assemble 1/10. If the labor market is perfectly competitive and rocket components are Acme’s only other cost, how much will Sam and Wiley be paid?

Instructions: Enter your responses as whole numbers.

Sam will be paid $ per month.

Wiley will be paid $ per month.

Explanation / Answer

Solution:

Sam will be paid $1,000 per month
Wiley will be paid $500 per month.

Working:

Marginal revenue = $30,000 - $25,000 = $5,000

Sam: 1/5 * 5,000 = $1,000

Wiley: 1/10 * 5,000 = $500

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