Economics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 4

Suppose that workers empin clearing woodland can each clear one acre per month if they are each equipped with a shovel, a machete, and a chainsaw. Clearing one acre brings in $1000 in revenue. Each worker's equipment costs the worker's emp$150 per month to rent and each worker toils 40 hours per week for four weeks each month.
a. What is the marginal revenue product of hiring one skilled worker to clear woodland for one month?
b. How much revenue per hour does each worker bring in?
c. If the minimum wage were $6.20, would the revenue per hour in part b exceed the minimum wage? If so, by how much per hour?
d. Now consider the emptotal costs. These include the equipment costs as well as a normal profit of $50 per acre.If the firm pays workers the minimum wage of $6.20 per hour, what will the firm's economic profit or be per acre?
e. At what value would the minimum wage have to be set so that the firm would make zero economic profit from empan additional worker to clear woodland?