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Answer:
Joe's Pizza Parlor
The highest number of workers that Joe will hire if he must pay each one $35 a day is
4 workers.
If he wants to maximize his profits without satisfying customers' demand, Joe can choose to work with 2 or 3 workers. However, he can renegotiate the worker's wages downwards.
Explanation:
a) Data and Calculations:
Price of pizza = $5
Wage per worker = $35/day
Number of Workers 0 1 2 3 4 5
Pizzas Baked Per Day 0 12 18 24 30 32
Total revenue 0 60 90 120 150 160
Marginal revenue 0 60 30 30 30 10
Marginal cost of labor 0 35 70 105 140 175
Profit 0 25 20 15 10 -15
The number of workers that Joe will hire if he is supposed to pay every worker $35 per day would be:
2 workers
Find the number of workers
Given that,
No. of workers Pizzas baked every day
0 0
1 12
2 18
3 24
4 30
5 32
Price of pizza [tex]= 5[/tex]
Wage of 1 worker each day = $ 35
If we calculate,
Total revenue for different no. of workers = 0 60 90 120 150 160
Marginal revenue for varied no. of workers = 0 60 30 30 30 10
Marginal cost of labor = 0 35 70 105 140 175
Profit [tex]=[/tex] 0 25 20 15 10 -15
In order to get pay each labor $35 a day, Joe must hire 2 workers.
Thus, 2 workers are the correct answer.
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