Suppose college graduates earn $25 an hour and high school graduates earn $15 an hour. Suppose too
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Suppose college graduates earn $25 an hour and high school graduates earn $15 an hour. Suppose too that the marginal product of college graduates at Johnson Tools is five hammers per hour, while the marginal product of high school graduates is four hammers per hour (regardless of the number of each type of worker employed). What is the least-cost production method for producing 100 hammers in an eight-hour day? What if the marginal product of high school graduates was instead two hammers per hour? What is the critical difference in productivity (in percentage terms) at which the type of worker hired changes?
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The leastcost production method for producing 100 hammers in an eighthour day is to hire only high school graduates If the marginal product of high sc...View the full answer
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