Second Mid-Term (Alternative) Test Part One (Chapter 6) Problem #3

Problem #1A firm has the following short-run production function:Q = 50L + 6L^2 – 0.5L^3Where Q = Quantity of output per weekL = Labor (number of workers)^ exponential power L^2 implies L squareNote: More important than the algebra is the clear explanation of the implications behind the numbers for all three problems.1. Assume that each worker is paid $10 per hour and works a 40-hour week. How many workers should the firm hire if the price of the output is $10?2. During economic down turn, firms reduce price in order to stay competitive. For this reason, the price of the output falls to $7.50. What do you think be the short run impact of this price reduction on the number of workers hired and why?3. What would firms do in the long run as far as production and hiring are concerned and why if economics situation does not improve and price reduction does not help their bottom line? Consider what business usually does if economic woe persists.4. Henry Ford, the founder of Ford Motor Company, offered in 1914 $5 workday wage, which was about twice the going wage. What is the rationale behind Ford’s high-wage policy to the marginal productivity theory of employment discussed in the text book? What is the major difference in their respective goals? Be specific as to what each approach tries to achieve. Ford called “the $5-a-day wage” one of the finest cost-cutting moves.In any hiring decision, there are typically three different problems; “adverse selection” due to “asymmetry of information” prior to hiring and of “moral hazard” after hiring in your answer. Please integrate these three terms, asymmetry of information, adverse selection, and moral hazard into your answer and explain clearly how Ford’s high wage policy specifically solved these three problems associated with hiring?Problem #2The owner of a small car-rental service is trying to decide on the appropriate numbers of vehicles and mechanics to use in the business for the current level of operations. He recognizes that his choice represents a trade-off between the two resources. His past experience indicates that this trade-off is as follows:Vehicles Mechanics100 2.5 (include one part-timer)70 550 1040 1535 2532 351. Assume that annual (leasing) cost per vehicle is $6,000 and the annual salary per mechanic is $25,000. What combination of vehicles and mechanics should he employ?2. Illustrate the problem with the use of an iso-quant/iso-cost diagram with number of vehicle leased on horizontal axis and number of mechanics hired on vertical axes. Draw two iso-cost curves: one using annual the leasing cost per vehicle ($6,000) and the annual salary per mechanics ($25,000) given in the problem. In this case leasing vehicle cost is relatively inexpensive to the annual salary per mechanics, Now, another iso-cost curve, hypothetical (no data given) this time, in which annual mechanics cost is relatively inexpensive to vehicle leasing cost. Indicate graphically the (two) optimal combinations of mechanics hired and vehicles with one iso-quant curve representing a given (target) level of vehicle leasing business with two iso-cost curves; one based on given values of the annual cost of hiring mechanics and leasing vehicles in the problem and another iso-cost curve, hypothetical one, in which mechanics cost is relatively inexpensive, i.e., two reverse cases of iso-cost curves, and discuss implication behind two different optimal combinations of resources. To be consistent vehicles leased on horizontal and mechanics on vertical axes.Problem #3An American company that sells consumer electronics products has manufacturing facilities in Mexico, Taiwan, and Canada. The average hourly wage, output, and annual overhead cost for each site are as follows:Mexico Taiwan CanadaHourly wage rate $1.50 $3.00 $6.00Output per person 10 18 20Fixed overhead cost $150,000 $90,000 $110,0001. Given these figures, is the firm currently allocating its production resources optimally? If not, why do you think so? Consider output per person as a proxy for marginal product.2. Suppose the firm wants to consolidate all of its manufacturing into one facility. Where should it locate? Is there any difference in treating cost information between (1) and (2)?3. In deciding to consolidate its manufacturing into one facility, what are other factors the firm needs to consider? Please list and explain your reasons.4. Nike outsources its manufacturing operation whereas New Balance does not.In terms of marginal productivity (output per person) and hourly wage rate, explain why New Balance did not outsource its production whereas Nike did briefly.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with CheapNursingWriter
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Architecture, Building and Planning
The assignment was well written and the paper was delivered on time. I really enjoyed your services.
Customer 452441, September 23rd, 2022
Theology
Job well done and completed in a timely fashioned!
Customer 452451, November 18th, 2022
Nursing
The paper was EXCELLENT. Thank you
Customer 452449, September 23rd, 2022
Anthropology
Excellent services will definitely come back
Customer 452441, September 23rd, 2022
Anthropology
excellent loved the services
Customer 452443, September 23rd, 2022
Business Studies
Thank you!
Customer 452451, November 27th, 2022
English 101
Very good job. I actually got an A
Customer 452443, September 25th, 2022
Business Studies
Job well done. Finish paper faster than expected. Thank you!
Customer 452451, October 3rd, 2022
Psychology
Thanks a lot the paper was excellent
Customer 452453, October 26th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat