Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost $12 per hour to operate. The horizontal (labor) intercept of the isocost line is 3 million, and the vertical (robot) intercept is 5 million. If Manny Motors' operating budget became $120 million, the horizontal intercept would become
A) 6 million robot hours
B) 20 million robot hours
C) 6 million labor hours
D) 20 million labor hours
E) $120 million

Question

Quizplus · Accepted Answer

To find the horizontal intercept, we need to solve for the quantity of labor hours that Manny Motors can afford. We know that the budget is $120 million, and the cost of using a worker is $20 per hour, so the maximum number of labor hours they can afford is 6 million (120,000,000 / 20). Therefore, the horizontal intercept is 6 million labor hours.