Question

Module 6 Assignment Worksheet Worksheet Instructions: 1. Complete this worksheet. 2. Once completed, to navigate to Assignment 6 on Blackboard. This can be found under the Module 6 Assign ments folder. 3. Refer to this worksheet when answering the questions online for Assignment 6. Worksheet Questions 1. Business is booming at the local McDonald's restaurant. It is contemplating adding a new grill and french-fry machine, but the day supervisor suggests simply hiring more workers. How should the manager decide which alternative to pursue? Compare the cost of the new grill and french-fry machine to the cost of additional a. b. Compare the additional output of the new grill and french-fry machine to the C. Compare the additional output per dollar spent on the new grill and french-fry d. None of the above workers. (which one is cheaper?) additional output of more workers. (which one produces mor machine to the additional output per dollar spent on additional workers. 2. Suppose a firm finds that the marginal product of capital is 60 and the marginal product labor is 20. If the price of capital is $6 and the price of labor is $2.50. Should this firm adjust its mix of capital and labor? How? (i.e., moreless capital? moreless l abor?) 3. A firm minimizes its costs by using inputs such that the marginal product of labor is 10 and the marginal product of capital is 20. The price of capital is $10 per unit. What must the price of labor be? Suppose that the price of labor is $10 per unit and the price of capital is $20 per a. Assuming the firm is minimizing its cost, if the marginal product of labor is 50, . unit what must the marginal product of capital be? Suppose the price of capital increases to $25 per unit, while the price of labor stays the same. To minimize the cost of producing the same level of output, would the firm become more capital-intensive (i.e., more capital/less labor) or b. more labor-intensive? a. Suppose that the average age of students in your economics class is 23.7 yea If a new 19-year-old student enrolls in the class, will the average age in the cla rise or fall?

Answer 1

Question 1

Restaurant is contemplating whether to add a new grill and french-fry machine or to hire more workers.

In order to decide between these two options, restaurant must calculate the marginal product of the two options and then calculate the ratio of marginal product of each option with respect to their prices.

In other words, additional output per dollar spent on new grill and french-fry machine should be compared with additional output per dollar spent on additional workers.

Which ever is higher should be the alternative that can be pursued.

Hence, the correct answer is the option (C).