You run a factory that uses pottery wheels to make pots. You can hire anywhere between...

  

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You run a factory that uses pottery wheels to make pots. You can hire anywhere between 1 and 3 skilled artisans (workers), and you can rent 1 or 2 pottery wheels (machines). Pots sell for $150 each. The total product of your factory (per day) is shown in the following table. Number of Workers (Labor, L) 1 2 3 6 8 Number of Machines (Capital, K) 2 5 9. 12 a. Given one machine and one worker, how much would you be willing to pay to hire a 2nd worker? (Consider the value of the marginal product of labor.) b. Again, starting from one machine and one worker, what rental rate would you be willing to pay to acquire a 2nd machine? (Consider the value of the marginal product of capital.) c. Suppose wage is $425 (per day). How many workers would you hire if you have one pottery wheels? 3. You run a factory that uses pottery wheels to make pots. You can hire anywhere between 1 and 3 skilled artisans (workers), and you can rent 1 or 2 pottery wheels (machines). Pots sell for $150 each. The total product of your factory (per day) is shown in the following table. Number of Workers (Labor, L) 1 2 3 6 8 Number of Machines (Capital, K) 2 5 9. 12 a. Given one machine and one worker, how much would you be willing to pay to hire a 2nd worker? (Consider the value of the marginal product of labor.) b. Again, starting from one machine and one worker, what rental rate would you be willing to pay to acquire a 2nd machine? (Consider the value of the marginal product of capital.) c. Suppose wage is $425 (per day). How many workers would you hire if you have one pottery wheels? 3.

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a When one machine and one worker are hired 3 pots are made which sell for 3150 450 When we hire ano... View the full answer