Suppose college graduates earn $25 an hour and high school graduates earn $5 an hour. Suppose too that the marginal product of college graduates at Johnson Tools is 8 hammers per hour, while the marginal product of high school graduates is 4 hammers per hour (regardless of the number of each type of worker employed). a. What is the least-cost production method for producing 100 hammers in an eight-hour day? O Hire one-third college graduates and two-thirds high school graduates. O Hire two-thirds college graduates and one-third high school graduates. Hire only high school graduates. O Hire half college graduates and half high school graduates. O Hire only college graduates. b. What if the marginal product of high school graduates was instead 2?

Suppose college graduates earn $25 an hour and high school graduates earn $5 an hour. Suppose too that the marginal product of college graduates at Johnson Tools is 8 hammers per hour, while the marginal product of high school graduates is 4 hammers per hour (regardless of the number of each type of worker employed). a. What is the least-cost production method for producing 100 hammers in an eight-hour day? O Hire one-third college graduates and two-thirds high school graduates. O Hire two-thirds college graduates and one-third high school graduates. Hire only high school graduates. O Hire half college graduates and half high school graduates. O Hire only college graduates. b. What if the marginal product of high school graduates was instead 2?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose college graduates earn $25 an hour and high school graduates earn $5 an hour. Suppose too that the marginal product of
college graduates at Johnson Tools is 8 hammers per hour, while the marginal product of high school graduates is 4 hammers per hour
(regardless of the number of each type of worker employed).
a. What is the least-cost production method for producing 100 hammers in an eight-hour day?
O Hire one-third college graduates and two-thirds high school graduates.
O Hire two-thirds college graduates and one-third high school graduates.
Hire only high school graduates.
Hire half college graduates and half high school graduates.
O Hire only college graduates.
b. What if the marginal product of high school graduates was instead 2?
O Hire half college graduates and half high school graduates.
Hire only high school graduates.
O Hire two-thirds college graduates and one-third high school graduates.
O Hire only college graduates.
O Hire one-third college graduates and two-thirds high school graduates.
c. What is the critical difference in productivity (in percentage terms) at which the type of worker hired changes?
When the marginal product of high school graduates is
percent of the marginal product of college graduates.

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