Question

4. Profit maximization Consider Live Happley Fields, a small player in the strawberry business whose production has no indiviDemand P = $12 Demand P = $16 WAGE (Dollars per worker) LABOR (Number of workers) At the given wage and price level, Live HapAt the given wage and price level, Live Happley should hire Suppose that the price of strawberries increases to $16 per pound

1. Live Happley should hire (one, two, three, four, or five) worker

2. Now Live Happley should hire (one, two, three, four, or five) workers

3. An increase in the price of strawberries will cause the (Supply of/demand for) strawberry pickers to (decrease/increase)

4. Live Happley will now hire (one, two, three, four, or five) workers

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Answer #1
Labor Output Marginal output P=12 P=16
0 0
1 18 18 216 288
2 34 16 192 256
3 48 14 168 224
4 60 12 144 192
5 70 10 120 160

Demand P = $12 Demand P = $16 WAGE (Dollars per worker) 34 LABOR (Number of workers)

When the wage is 170 and price is 12

1) Live happley should hire 2 workers

When P=16 and W=170

2) Live happley should hire 4 workers

3) demand for strawberry pickers to increase

4) When W = 200 and P=16, Live happley will hire 3 workers

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