Problem
An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.25 in wasted wages. The agency decides to hire operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls).
|
Number of Operators
|
Total minutes of personal calls
(per hour)
|
|
0
|
1130
|
|
1
|
980
|
|
2
|
855
|
|
3
|
740
|
|
4
|
635
|
|
5
|
540
|
|
6
|
460
|
a. What is the most the agency would be willing to pay the first operator?
b. If operators are paid $23 an hour, how many operators should the agency hire?
c. Assume that the cost of personal calls temporarily rises to $0.29 in wasted wages. If the operator wage is still $23/hour, how many operators should the agency hire now?
d. Assume a change in the operator labor market results in operator wages rising to $28 an hour; with the cost of personal calls back at the original $0.25 per minute, how would this affect the number of operators the agency should optimally hire?