Table 17-6 -Refer to Table 17-6.The Hair Cuttery, a New Hair Salon

question 26

Essay

Table 17-6

-Refer to Table 17-6.The Hair Cuttery, a new hair salon, is ready to start hiring.The table above shows the relationship between the number of hairdressers the firm hires and the quantity of haircuts it produces.
a.Suppose the price of haircuts is $8.Complete the table by filling in the values for marginal product and marginal revenue product.
b.The Hair Cuttery is an input price-taker.Suppose the wage paid to hairdressers is $40 per day.What is the profit-maximizing number of hairdressers?
c.Suppose the wage rate rises to $60 per day.
(i) What happens to the firm's demand curve for hairdressers?
(ii) What happens to the profit-maximizing quantity of hairdressers?
d.Suppose the wage rate is $40 per day and the price of haircuts is now $10.
(i) What happens to the firm's demand curve for hairdressers?
(ii) What happens to the profit-maximizing quantity of hairdressers?

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Definitions:

Value Frontier

The boundary where the maximum value is delivered to customers at the lowest cost, representing an optimal position for a company.

Marketers

Professionals who are engaged in the promotion and selling of products or services.

Economy Strategy

An approach aiming for cost efficiency and minimized spending within a business or economic system.

Price Wars

A competitive strategy involving companies lowering prices to undercut competitors, often leading to a situation where prices continue to drop.