Problem 1
Cindy is a baker and runs a large cupcake shop. She has already hired 11 employees and is thinking of hiring a 12 th. Cindy estimates that a 12 th worker would cost her \(\$ 100\) per day in wages and benefits while increasing her total revenue from \(\$ 2,600\) per day to \(\$ 2,750\) per day. Should Cindy hire a 12 th worker? a. Yes. b. No. c. You need more information to figure this out.
Problem 3
Alice runs a shocmaking factory that utilizes both labor and capital to make shoes. Which of the following would shift the factory's demand for capital? You can sclect one or more answers from the choices shown. a. Many consumers decide to walk barefoot all the time. b. New shoemaking machines are twice as efficient as older machines. c. The wages that the factory has to pay its workers rise due to an economy- wide labor shortage.
Problem 4
FreshLeaf is a commercial salad maker that produces "salad in a bag" that is sold at many local supermarkets. Its customers like lettuce but don't care so much what type of lettuce is included in each bag of salad, so you would expect FreshLeaf's demand for iceberg lettuce to be: a. Elastic. b. Inelastic. c. Unit elastic. d. All of the above.
Problem 6
A software company in Silicon Valley uses programmers (labor) and computers (capital) to produce apps for mobile devices. The firm estimates that when it comes to labor, \(\mathrm{MP}_{t}=5\) apps per month while \(P_{L}=\$ 1,000\) per month. And when it comes to capital, \(\mathrm{MP}_{\mathrm{C}}=8\) apps per month while \(P_{C}=S 1,000\) per month. If the company wants to maximize its profits, it should: a. Increase labor while decreasing capital. b. Decrease labor while increasing capital. c. Keep the current amounts of capital and labor just as they are. d. None of the above.
