Question

Juanita is trying to convince the owner of a jewelry store to hire her. She argues that she could help the shop sell an additional three rings per day for a profit of $20 each. If the facts are not in dispute, but the owner does not hire her, then a. the wage rate must be < $60 per day. b. hiring Juanita would involve a negative marginal product. c. the wage rate must be more than $60 per day. d. the wage rate must be < $20 per day.

Answer 1

a. the wage rate must be < $60 per day.

Step-by-step explanation:

Additional sale due to Juanita = $20 [tex]\times[/tex/ 3 = $60 each day.

In this case additional revenue = $60 per day, thus the cost shall be less than $60 per day, this is with the basic assumption that all the fixed cost is recovered originally before Juanita's appointment, as now each variable cost has to be recovered, we have additional profit of $60 per day, so therefore cost shall not exceed additional revenue, as this will lead to loss, therefore her wage rate shall be less than $60 per day.

Final Answer

a. the wage rate must be < $60 per day.