Ms.Moneynickel operates a retail store in the local mall.The marginal product of labor at the mall is a function of employee effort level.The marginal product of employee effort is: MP_e(e)= 20 - e.Ms.Moneynickel can sell all the product she stocks for $20.Employees determine their effort level according to the function: e = 10(w - ),where is the minimum wage.Currently,the minimum wage is $6.The marginal cost to Ms.Moneynickel of effort is: MC(e)= .What is the wage rate Ms.Moneynickel should offer her employees to maximize profits? If the minimum wage is increased by $1,how much should Ms.Moneynickel increase the wage rate paid to her employees?

Question

Quizplus · Accepted Answer

The Answer of Ms.Moneynickel operates a retail store in the local mall.The marginal product of labor at the mall is a function of employee effort level.The marginal product of employee effort is: MP_e(e)= 20 - e.Ms.Moneynickel can sell all the product she stocks for $20.Employees determine their effort level according to the function: e = 10(w - ),where is the minimum wage.Currently,the minimum wage is $6.The marginal cost to Ms.Moneynickel of effort is: MC(e)= .What is the wage rate Ms.Moneynickel should offer her employees to maximize profits? If the minimum wage is increased by $1,how much should Ms.Moneynickel increase the wage rate paid to her employees?

MsMoneynickel Operates a Retail Store in the Local Mall