The following table shows the relationship between the number of workers employed and outputs at Wendy’s Café.   Number of Workers Cups of Coffee Produced (per day) 1 50 2 95 3 135 4 170 5 200 6 225           Suppose the market price of each cup of coffee is $20, and the market daily wage for each worker is $800. In order to maximize profit, how many workers should Wendy’s Café employ? Explain and show the steps of your calculations.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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  • The following table shows the relationship between the number of workers employed and outputs at Wendy’s Café.

 

Number of Workers

Cups of Coffee Produced

(per day)

1

50

2

95

3

135

4

170

5

200

6

225

 

        Suppose the market price of each cup of coffee is $20, and the market daily wage for each worker is $800. In order to maximize profit, how many workers should Wendy’s Café employ? Explain and show the steps of your calculations.                                                                                                                                                                             

 

 

 

(b)   The following diagram shows the market for medical checkup.

 

  1. What are the equilibrium price and quantity of medical checkup?
  2. Which kind of externality problems exists in the market for medical checkup? How does this externality problem affect the efficiency of the market? Explain in detail.

How can the government solve this externality problem? Explain in detail.

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