Assume That an Employer Believes That the "Efficiency" (E)it Can

question 105

Essay

Assume that an employer believes that the "efficiency" (e)it can get from a particular worker,as a function of the hourly wage (w),is given by function e = -0.125w + 0.15w² - 0.005w³,at least up to a wage of 30.
a.Create a table of w,e,e/w,and w/e for wages equal to 5,10,14,15,16,20,and 25.
b.Which wage gives the highest ratio of efficiency per unit of labour cost?
c.Once the firm has hit on an optimal w,whatever it is,would cutting wages whenever demand falls off increase or decrease wages per unit of efficiency?

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Definitions:

Income Statement

A financial document that shows a company's revenues, expenses, and net income over a specific period, displaying its profitability.

Ticket Revenue

Income earned from selling tickets for events such as movies, concerts, sports, or transportation services.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Accumulated Depreciation

The total depreciation of a fixed asset accumulated up to a specified time.