Scenario: A car repair shop hires workers and pays them the federal minimum wage of $7.25. The following table shows the marginal returns to each worker in terms of number of cars repaired.

-Refer to the scenario above.In addition,suppose the fixed cost of operating this shop is $1,000 per day.If 3 workers are hired at the federal minimum wage of $7.25,what is the total cost of this shop?

Question

Scenario: A car repair shop hires workers and pays them the federal minimum wage of $7.25. The following table shows the marginal returns to each worker in terms of number of cars repaired.
 
-Refer to the scenario above.In addition,suppose the fixed cost of operating this shop is $1,000 per day.If 3 workers are hired at the federal minimum wage of $7.25,what is the total cost of this shop?

Quizplus · Accepted Answer

The total cost of the shop is the fixed cost plus the variable cost. The variable cost is the cost of the workers, which is the number of workers times the wage per worker. In this case, the number of workers is 3 and the wage per worker is $7.25, so the variable cost is 3 * $7.25 = $21.75. The fixed cost is $1,000, so the total cost is $1,000 + $21.75 = $1,021.75.

Scenario: a Car Repair Shop Hires Workers and Pays Them