Table 17-5 -Refer to Table 17-5.Oil Can Harry's, a New Automobile Service

question 251

Essay

Table 17-5

-Refer to Table 17-5.Oil Can Harry's, a new automobile service shop, is ready to start hiring.The table above shows the relationship between the number of mechanics the firm hires and the quantity of oil changes it produces.
a.Suppose the price of an oil change is $20.Complete the table by filling in the values for marginal product and marginal revenue product.
b.Oil Can Harry's is an input price-taker.Suppose the wage paid to mechanics is $80 per day.What is the profit-maximizing number of mechanics?
c.Suppose the wage rate rises to $100 per day.
(i) What happens to the firm's demand curve for mechanics?
(ii) What happens to the profit-maximizing quantity of mechanics?
d.Suppose the wage rate is $60 per day and the price of an oil change is now $15.
(i) What happens to the firm's demand curve for mechanics?
(ii) What happens to the profit-maximizing quantity of mechanics?

---

Definitions:

Contractual Agreements

Contractual agreements are legally binding arrangements between two or more parties outlining the terms, conditions, and obligations of each.

Financial Statement Disclosure

Requirement to provide comprehensive information within financial statements, ensuring transparency and aiding stakeholders in decision-making.

Gross Profit Percentage

A financial metric expressing gross profit as a percentage of total sales.

Net Sales

The total sales revenue of a company, minus the returns, allowances for damage or loss, and discounts.