Question: The manager of All City Realtors wants to hire some real estate agents to specialize in selling housing units acquired by the Resolution Trust Corporation
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a. Construct the marginal revenue product schedule by filling in the blanks in the table.
b. If the manager of All City Realtors must pay a wage rate of $32,000 per year to get agents who will specialize in selling RTC housing, how many agents should the manager hire? Why?
c. If the wage rate falls to $18,000 per year, how many agents should the manager hire?
d. Suppose the RTC raises its commission to $3,000 per units sold. Now what is the marginal revenue product for each real estate agent employed?
e) Now that the RTC is paying $3,000 per unit sold, how many agents should the manage hire if the wage rate is $30,000.
Number of real estate agents Marginal Product Marginal (number of additional venue product units sold per year) 20 17 15 12 4
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