Question

A city is trying to estimate the most money it should offer to contractors as an incentive for them to finish a disruptive road project early. The transportation project lengthens transport times by 10 hours per week for 40,000 workers. Assume that all workers are paid $10 per hour in a perfectly competitive labor market. What is the most that the city should pay to the contractors as an incentive for completing the project four weeks early? HTML EditorKeyboard Shortcuts

Answer 1

$16,000,000

Step-by-step explanation:

To answer this question we pull out information relevant to us as follows

What is the number of workers = 40,000workers

How many labour hours per week = 10 hours per week

What is the hourly wage = $10/hour

First, Amount spent per worker in a week =

$10 x 10 hours = $100 per week

Second, Amount to be expended for 4 weeks

= $100 x 4 weeks = $400

Finally, the most that should be paid to the contractor for workers

$400 x 40,000 workers

= $16,000,000

Answer 2

The city should pay at most $16 million to the contractors as an incentive for completing the project four weeks earlier.

Step-by-step explanation:

Total number of saved work hours = 4 weeks * 40000 workers/week * 10 hours/worker = 1,600,000 work hours

So, Money saved = 1,600,000 work hours * $10/ work-hour

= $16 million

Therefore, the city should pay at most $16 million to the contractors as an incentive for completing the project four weeks earlier.