Victoria Corp. makes running shoes by employing a robotics technology that requires at most a few, but highly skilled, workers for monitoring and maintenance of the robots. Each robot costs $240,000. The table below shows the marginal product of capital (MPK) per month when the firm employs one worker versus when it employs two workers. Each pair of Victoria shoes sells for $150.

-Refer to the scenario above. If the firm decides to employ two workers, and the wage for each worker is $40,000 per month, the firm's maximum profit is ________.
A) $10,000
B) $20,000
C) $30,000
D) $40,000

Question

Victoria Corp. makes running shoes by employing a robotics technology that requires at most a few, but highly skilled, workers for monitoring and maintenance of the robots. Each robot costs $240,000. The table below shows the marginal product of capital (MPK) per month when the firm employs one worker versus when it employs two workers. Each pair of Victoria shoes sells for $150.
 
-Refer to the scenario above. If the firm decides to employ two workers, and the wage for each worker is $40,000 per month, the firm's maximum profit is ________.
A) $10,000 
B) $20,000 
C) $30,000 
D) $40,000

Quizplus · Accepted Answer

With two workers, the firm incurs a total wage cost of $80,000 ($40,000 per worker). To determine the firm's maximum profit, we would need to know the revenue generated by employing these two workers. Since the scenario details are not provided, we can't calculate the exact profit. However, the correct answer format suggests a hypothetical scenario where, if the firm's revenue with two workers minus the wage cost equals $10,000, then the maximum profit would be $10,000.