Ted’s café hires workers to produce lattes. The market for lattes is competitive and the price of a latte is $4. The labor market is also competitive, and the wage rate is $40 a day. The table shows the workers’ total product schedule. If Ted’s Cafe is one of 300 firms in the latte market, how many workers will be employed in the market at this price? Ted’s Café installs a new latte equipment that increases the productivity of workers by 50%. If the price of a latte remains at $4 and the wage rises to $48 a day, how many workers does Ted Café hire and why?

Ted’s café hires workers to produce lattes. The market for lattes is competitive and the price of a latte is $4. The labor market is also competitive, and the wage rate is $40 a day. The table shows the workers’ total product schedule. If Ted’s Cafe is one of 300 firms in the latte market, how many workers will be employed in the market at this price? Ted’s Café installs a new latte equipment that increases the productivity of workers by 50%. If the price of a latte remains at $4 and the wage rises to $48 a day, how many workers does Ted Café hire and why?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter26: Factor Markets: With Emphasis On The Labor Market

Section26.1: Factor Markets

Problem 4ST

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