Question

d. Brownie sell for $2.50 apiece ; ingredients cost $1 per brownie. Use this table to recommend the number of workers he should hire, and the output of cookies he should produce, for a wage of $13.50, $10.50, $9.00. Bear in mind that the revenue produced by each worker is the net after taking account of other variable costs.

1. 1. Nick buys a second oven and estimates output, see table 2
2. Table 2. Brownie output and number of workers, two ovens

   1. Workers	Brownie output
      1	10
      2	24.5
      3	38.5
      4	52
      5	64.75
      6	76.75
      7	87.75
      8	97.75
      9	106.75
      10	114.75

      Again, assume ingredients cost a dollar per brownie. Use this table to recommend the number of workers he should hire, and the output of cookies he should produce, for a wage of $21, $18, $13.50.

Answer 1

Labour	Output	Marginal product	Value of marginal product	wage1	marginal profit	wage2	marginal profit	Wage3		Marginal profit 3
1	10	10	10*1.5$=15$	13.5	1.5	10.5	4.5	9		6
2	19	9	9*1.5$=13.5$	13.5	0	10.5	3	9		4.5
3	27	8	8*1.5=12	13.5	-0.5	10.5	2.5	9		3
4	34	7	7*1.5=10.5	13.5	-3.5	10.5	0	9		.05
5	40	6	6*1.5=9	13.5	-4.5	10.5	-1.5	9		0
6	45	5	5*1.5=7.5	13.5	-6.5	10.5	-3.5	9		-2.5
7	49	4	4*1.5=6	13.5	-7.5	10.5	-4 5	9		-3
8	52	3	3*1.5=4.5	13.5	-9.5	10.5	-6.5	9		-4.5
9	54	2	2*1.5=3	13.5	-10.5	10.5	-7.5	9		-6
10	55	1	1*1.5=1.5	13.5	-12	10.5	-9	9		-7.5

Net price = $2.50-$1 = $1.50

At wage $13.5, the producer will have profit up to 1 unit of labour.

At wage $10.5, the producer will have profit up to 3 units of labour.

At wage $9, the producer will have profit up to to 4 units of labour.

The second question is done in the same manner.