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Pham can work as many or as few hours as she wants at the college bookstore for \(12 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the bookstore or other potential jobs. One potential job at a café will pay her \)15 per hour for up to 6 hours per week. She has another job offer at a garage that will pay her \(13 an hour for up to 5 hours per week. And she has a potential job at a daycare center that will pay her \)11.50 per hour for as many hours as she can work. If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore?

Short Answer

Expert verified

Pham will work for 4 hours at the bookstore.

Step by step solution

01

Estimating the income equation

Let the number of hours that Pham chooses to work at the daycare center be w, that at the bookstore be x, that at the café be y, and that at the garage be z. Her income equation will be

M=11.5w+12x+15y+13z
02

Income maximization

The daycare center will provide Pham with the least wages, which is $11.5 per hour for any number of hours she chooses to work. The marginal benefit in working at the bookstore rather than the daycare center is $0.5. Therefore, she will not work in the daycare center.

As the wages per hour at the café for 6 hours provide a maximum marginal benefit, she will work at the café for 6 hours. The next highest paying job is at the garage. So, she will work at the garage for 5 hours. She can work at the college bookstore for the remaining hours.

Job

Wages (in $ per hour)

Marginal Benefit (in $ per hour)

Café

15

2

Garage

13

1

Bookstore

12

0.5

Daycare center

11.50

-

03

Hours spent by Pham working in the bookstore

As Pham has a total of 15 hours to work, she will work at the café for 6 hours and at the garage for 5 hours. Then, she will work at the bookstore for the remaining hours. The hours can be estimated as follows.

15=x+y+z15=x+6+515=x+11x=15-11=4

Therefore, Pham will work for 4 hours at the college bookstore.

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Most popular questions from this chapter

What is an opportunity cost? How does the idea relate to the definition of economics? Which of the following decisions would entail the greater opportunity cost: allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at the edge of a typical suburb for such a lot? Explain.

Suppose that you initially have \(100 to spend on books or movie tickets. The books start off costing \)25 each, and the movie tickets start off costing \(10 each. For each of the following situations, would the attainable set of combinations that you can afford increase or decrease?

a. Your budget increases from \)100 to \(150, while the prices stay the same.

b. Your budget remains \)100, and the price of books remains \(25, but the price of movie tickets rises to \)20.

c. Your budget remains \(100, and the price of movie tickets remains \)10, but the price of a book falls to $15.

Starbucks has $1 billion to invest. It can either purchase a rival coffee shop chain or build additional Starbucks shops. If Starbucks chooses to purchase the rival chain, what does that say about the relative profitability of purchasing and owning the rival's existing shops versus building additional Starbucks shops? Explain.

For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units.

a. 3,000 units at which MC = \(10 and MB = \)13.

b. 11 units at which MC = \(4 and MB = \)3.

c. 43,277 units at which MC = \(99 and MB = \)99.

d. 82 units at which MC < MB.

e. 5 units at which MB < MC.

Explain the typical shapes of marginal benefit and marginal cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product? Explain.

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