Question

Suppose vacation time comes in 1- week intervals, and that the total willingness to pay for total vacation time by younger and older workers in a competitive industry is as given in the following table:


Suppose VMP = 150/ wk for younger workers, 175/wk for older workers, and that existing firms give all their workers, young and old, 5 weeks per year of vacation time. Can these firms be maximizing their profits? If so, explain why. If not, say what changes they should make, and how much extra profit willresult.


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  • CreatedDecember 12, 2014
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