Pham can work as many or as few hours as she wants at the college bookstore for \(12 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the bookstore or other potential jobs. One potential job at a café will pay her \)15 per hour for up to 6 hours per week. She has another job offer at a garage that will pay her \(13 an hour for up to 5 hours per week. And she has a potential job at a daycare center that will pay her \)11.50 per hour for as many hours as she can work. If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore?

Short Answer

Expert verified

Pham will work for 4 hours at the bookstore.

Step by step solution

01

Estimating the income equation

Let the number of hours that Pham chooses to work at the daycare center be w, that at the bookstore be x, that at the café be y, and that at the garage be z. Her income equation will be

M=11.5w+12x+15y+13z
02

Income maximization

The daycare center will provide Pham with the least wages, which is $11.5 per hour for any number of hours she chooses to work. The marginal benefit in working at the bookstore rather than the daycare center is $0.5. Therefore, she will not work in the daycare center.

As the wages per hour at the café for 6 hours provide a maximum marginal benefit, she will work at the café for 6 hours. The next highest paying job is at the garage. So, she will work at the garage for 5 hours. She can work at the college bookstore for the remaining hours.

Job

Wages (in $ per hour)

Marginal Benefit (in $ per hour)

Café

15

2

Garage

13

1

Bookstore

12

0.5

Daycare center

11.50

-

03

Hours spent by Pham working in the bookstore

As Pham has a total of 15 hours to work, she will work at the café for 6 hours and at the garage for 5 hours. Then, she will work at the bookstore for the remaining hours. The hours can be estimated as follows.

15=x+y+z15=x+6+515=x+11x=15-11=4

Therefore, Pham will work for 4 hours at the college bookstore.

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Most popular questions from this chapter

Match each term with the correct definition.

• Economics

• Opportunity cost

• Marginal analysis

• Utility

e. The next-best thing that must be forgone in order to produce one more unit of a given product

f. The pleasure, happiness, or satisfaction obtained from consuming a good or service

g. The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity

h. Making choices based on comparing marginal benefits with marginal costs

Make (a) a positive economic statement of your choice and then (b) a normative economic statement relating to your first statement.

Referring to the table in problem 5, suppose improvement occurs in the technology of producing forklifts but not in the technology of producing automobiles. Draw the new production possibilities curve. Now, assume that a technological advance occurs in producing automobiles but not in producing forklifts. Draw the new production possibilities curve. Now, draw a production possibilities curve that reflects technological improvement in the production of both goods.

Production Alternatives

Type of Production

A

B

C

D

E

Automobiles

0

2

4

6

8

Forklifts

30

27

21

12

0

Indicate whether each of the following statements applies to microeconomics or macroeconomics.

The unemployment rate in the United States was 3.7 percent in December 2018.

a. A U.S. software firm laid off 15 workers last month and transferred the work to India.

b. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

c. U.S. output, adjusted for inflation, increased by 2.3 percent in 2017.

d. Last week, Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point.

e. The consumer price index rose by 2.2 percent from November 2017 to November 2018.

What are the two major ways in which an economy can grow and push out its production possibilities curve?

  1. Better weather and nicer cars
  2. Higher taxes and lower spending
  3. Increases in resource supplies and advances in technology
  4. Decreases in scarcity and advances in auditing
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