Optimal Input Level. Do-It-Yourself, Inc., sells budget-priced stereo receivers, in both kit and fully-assembled forms. Customers who assemble their own receivers benefit from the lower kit price of $100 per receiver. "Full-service" customers enjoy the luxury of an assembled receiver, but pay a higher price of $150 per receiver. Both kit and fully assembled receiver prices are stable. The company has observed the following relation between the numbers of assembly workers employed per day and assembled receiver output:

A. Construct a table showing the net marginal revenue product derived from assembly worker employment.
B. How many assemblers would Do-It-Yourself employ at a daily wage rate of $120?
C. What is the highest daily wage rate Do-It-Yourself would pay to hire four assemblers per day?

Question

Optimal Input Level. Do-It-Yourself, Inc., sells budget-priced stereo receivers, in both kit and fully-assembled forms. Customers who assemble their own receivers benefit from the lower kit price of $100 per receiver. "Full-service" customers enjoy the luxury of an assembled receiver, but pay a higher price of $150 per receiver. Both kit and fully assembled receiver prices are stable. The company has observed the following relation between the numbers of assembly workers employed per day and assembled receiver output:
 
A. Construct a table showing the net marginal revenue product derived from assembly worker employment.
B. How many assemblers would Do-It-Yourself employ at a daily wage rate of $120?
C. What is the highest daily wage rate Do-It-Yourself would pay to hire four assemblers per day?

Quizplus · Accepted Answer

The Answer of Optimal Input Level. Do-It-Yourself, Inc., sells budget-priced stereo receivers, in both kit and fully-assembled forms. Customers who assemble their own receivers benefit from the lower kit price of $100 per receiver. "Full-service" customers enjoy the luxury of an assembled receiver, but pay a higher price of $150 per receiver. Both kit and fully assembled receiver prices are stable. The company has observed the following relation between the numbers of assembly workers employed per day and assembled receiver output:
 
A. Construct a table showing the net marginal revenue product derived from assembly worker employment.
B. How many assemblers would Do-It-Yourself employ at a daily wage rate of $120?
C. What is the highest daily wage rate Do-It-Yourself would pay to hire four assemblers per day?