Joe Fixit has an appliance-repair business. He has more business than hecan handle and wants to hire another repair person. Joe estimates thatthree appliances can be repaired each hour by a qualified person. Joe billsout labor at $45 per hour, but he stipulates that the minimum charge forappliance-repair estimates is $30 plus parts. What is the marginal revenueproduct of a qualified repair person? What is the maximum hourly wagethat he would pay an employee?
Joe Fixit has an appliance-repair business. He has more business than hecan handle and wants to hire another repair person. Joe estimates thatthree appliances can be repaired each hour by a qualified person. Joe billsout labor at $45 per hour, but he stipulates that the minimum charge forappliance-repair estimates is $30 plus parts. What is the marginal revenueproduct of a qualified repair person? What is the maximum hourly wagethat he would pay an employee?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Joe Fixit has an appliance-repair business. He has more business than he
can handle and wants to hire another repair person. Joe estimates that
three appliances can be repaired each hour by a qualified person. Joe bills
out labor at $45 per hour, but he stipulates that the minimum charge for
appliance-repair estimates is $30 plus parts. What is the marginal revenue
product of a qualified repair person? What is the maximum hourly wage
that he would pay an employee?
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