A gourmet food truck selling vegetarian hot dogs has just opened in Seattle. A vegi-dog is currently selling for $5 over and above the cost of intermediate goods (condiments, glutenfree bun, and so on). Assuming that labor is the only variable factor of production, the following table gives the production function for the vegi-dog.

a. Suppose the current wage rate is $14 per hour. How many workers will the food truck employ?

b. Suppose the economy begins to grow, incomes rise, and the price of a vegi-dog is pushed up to $7. Assuming no increase in the price of labor, how many workers will the food truck hire?

c. An increase in the demand for labor pushes up wages to $20 per hour. What impact will this increase in cost have on employment and output in the food truck at the $9 price of vegi-dogs?

d. If all firms behaved like our food truck, would the allocation of resources in Seattle be efficient? Explain your answer.

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Workers 0 1 2 3 4 5 6 7 Vegi-Dogs 0 12 20 26 30 32 33 30