You are the manager of a large grocery store. Currently, you have 10 checkout registers in the

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You are the manager of a large grocery store. Currently, you have 10 checkout registers in the front of your store. Depending on the time of day, you have between 2 and 10 checkers working up front. You have no automated self-checkout registers but the technology has been improving and they have become cheaper in the last few years.

A. Suppose your state enacts a $15 minimum wage, replacing the existing $10 minimum wage. Suppose that many of your current checkers currently earn the minimum wage, so they will each cost you $5 more per hour. How does this change affect your cost-minimizing use of labor and capital?

B. Might this be the time to start using automatic checkout registers? What factors would help determine how many you may want to purchase?

C. Suppose a new app is created that allows your customers to scan their items with their smartphones as they put them in the cart, pay with a pre-registered credit card, and simply take their groceries out the door without ever officially “checking out.” How does this affect the marginal productivity of checkers (L) and automated machines (K)? What might the manager of the grocery store do in this situation?

D. Discussion Question: In the model of production , labor and capital can both be used to produce output, implying some substitutability between inputs. What about a situation where to produce output, you need one worker and one machine? Consider a lawn-mowing service that needs one worker operating each lawnmower to mow a lawn. How would an increase in the minimum wage affect a firm like this? What kinds of decisions should the manager consider?