Maximizing profit with isoprofit curvesSuppose that you are starting up a lawn-raking business. All of your workers are required to supply their own rakes, so the only cost to you is hiring labor at an hourly rate. Suppose that the market price of raking someone's yard is $24 per lawn and the hourly wage is $18 per hour. The following graph shows the production function (PF) for your business. LAWNS RAKED PER DAY100908070605040302010001020PF3040 50 60 70LABOR (Hours per day)8090 100IsoprofitProfit Max Complete the following table with your findings regarding the profit-maximizing outcome.Economic ObjectAmount per DayProfit-maximizing laborhoursProfit-maximizing outputlawnsProfit earnedTrue or False: At the profit-maximizing level of labor, the marginal product of labor is equal to the wage rate divided by the price of raking someone'syard, or 0.75 lawns per hour.True$FalseIf the wage rate increases, you willthe production of raked lawns to maximize profit.

Total revenue determines the amount earned from the quantity produced.Economic costs involve not…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Maximizing profit with isoprofit curves
Suppose that you are starting up a lawn-raking business. All of your workers are required to supply their own rakes, so the only cost to you is hiring labor at an hourly rate. Suppose that the market price of raking someone's yard is $24 per lawn and the hourly wage is $18 per hour. The following graph shows the production function (PF) for your business.

LAWNS RAKED PER DAY
100
90
80
70
60
50
40
30
20
10
0
0
10
20
PF
30
40 50 60 70
LABOR (Hours per day)
80
90 100
Isoprofit
Profit Max

Complete the following table with your findings regarding the profit-maximizing outcome.
Economic Object
Amount per Day
Profit-maximizing labor
hours
Profit-maximizing output
lawns
Profit earned
True or False: At the profit-maximizing level of labor, the marginal product of labor is equal to the wage rate divided by the price of raking someone's
yard, or 0.75 lawns per hour.
True
$
False
If the wage rate increases, you will
the production of raked lawns to maximize profit.

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