The output of workers at a Porta Egypt factory depends on the number of supervisors hired. The factory sells each unit of its output for $0.50, hires 50 production workers at a wage of $100 per day, and needs to decide how many supervisors to hire. The following table gives the production function for the supervisors.

a. Suppose the current wage rate is $500 per day. How many supervisors should the Porta Egypt factory hire?

b. An increase in the demand for labor pushes up wages to $550 per day. What impact will this increase in cost have on employment and output in the factory at the $1 price of output?

c. If all firms behaved like the Porta Egypt factory, would the allocation of resources in Egypt be efficient? Explain your answer.

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Supervisors Output (Units per Day) 0 11,000 1 14,800 18,000 19,500 20,200 20,600 2345