Helen makes cheesecakes using equipment that she rents for $30 and cheese and butter that cost $4.55 a cake. She hires workers and finds that they produce according to the following schedule:
|
Cheesecakes
|
Total hours
|
|
1
|
0.1
|
|
2
|
0.25
|
|
3
|
0.475
|
|
4
|
0.8125
|
|
5
|
1.31875
|
|
6
|
2.078125
|
|
7
|
3.217188
|
|
8
|
4.925781
|
Workers are paid $10/hour.
a. Using a spreadsheet, calculate and graph the marginal cost of each cheesecake. Why does the MC curve have the slope (up, down, or flat) that it does?
b. Calculate and make a new graph giving the marginal cost of each cheesecake if workers become 25% more productive, that is to say, if each cake can be made with only 75% as much labor. Calculate and make a new graph of the marginal cost if workers get a raise to $15/hour, with the old productivity.