Patty’s Pizza has the production function per hour shown in the table below. The hourly wage rate for each worker is $10. Each pizza sells for $2. Quantity of workers - 0, 1, 2, 3, 4, 5. Quantity of pizza - 0, 9, 15, 19, 22, 24. Now, let’s assume that Patty buys a new high-tech pizza oven that allows her workers to become twice as productive as before. That is, the first worker now produces 18 pizzas per hour instead of 9, and so on. e) Calculate the new MPL and the new VMPL at the original price of $2 per pizza using the new information above. f) Using answer (e) determine how Patty’s hiring decision responds to this increase in the productivity of her workforce when the wage rate is $10, i.e., will she hire more workers or less workers than before or not change the number of
Patty’s Pizza has the production function per hour shown in the table below. The hourly wage rate for each worker is $10. Each pizza sells for $2.
Quantity of workers - 0, 1, 2, 3, 4, 5.
Quantity of pizza - 0, 9, 15, 19, 22, 24.
Now, let’s assume that Patty buys a new high-tech pizza oven that allows her workers to become twice as productive as before. That is, the first worker now produces 18 pizzas per hour instead of 9, and so on.
e) Calculate the new MPL and the new VMPL at the original price of $2 per pizza using the new information above. f) Using answer (e) determine how Patty’s hiring decision responds to this increase in the productivity of her workforce when the wage rate is $10, i.e., will she hire more workers or less workers than before or not change the number of workers? (use a diagram)
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