You’ve been hired as an economic consultant by a price-taking firm that produces baseball caps. The firm already has a factory so it is operating in the short run. The price of caps is $5, the hourly wage is $12, and each cap requires $1 worth of material. The firm has experimented with the different workshops and the results are shown in the first two columns of the following table.
a.Fill in the blanks in the table
b.Is it sensible to continue to operate ata loss with 14 workers
c.Would it be better to operate with 15 workers, Explain using the marginal principle
Workers
Caps
Labor cost
Material cost
Variable cost
Total revenue
Marginal cost of caps
14
56
15
60
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