The Solo Coal Mine is the only employer in the small town of Way out there.The market supply of coal miners is Q^s = 0.02W - 400 and Q^d = 500 - 0.02W,where W is the annual wage of a coal miner and Q is the number of coal miners.What is the profit maximizing number of coal miners for the coal mine to hire?

Question

Quizplus · Accepted Answer

The profit-maximizing number of coal miners is found where MR = MC. MR = 500 - 0.04W and MC = 0.02W - 400. Setting these equal, we get 500 - 0.04W = 0.02W - 400, which solves to W = 33,333. Plugging this back into the demand curve, we get Q = 500 - 0.02(33,333) = 33.33.

The Solo Coal Mine Is the Only Employer in the Small