Assume That an Employer Believes That the "Efficiency" (E) It $w , e , e / w$

question 71

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 effici ency per unit of labor 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:

Current Liabilities

Financial responsibilities that must be settled within a year or during the regular course of a business's operational cycle.

Comprehensive Balance Sheet

An extensive version of a balance sheet that includes all financial information and disclosures including those outside the conventional balance sheet.

Assets

Economic resources controlled or owned by a business that are expected to produce benefits in the future.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.