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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)

°ä²¹´Úé

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

What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs? t are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?

Because investment and capital goods are paid for with savings, higher savings rates reflect a decision to consume fewer goods in the present to invest in more goods for the future. Households in China save 40 percent of their annual incomes each year, whereas U.S. households save less than 5 percent. At the same time, production possibilities are growing at roughly 7 percent per year in China but only about 3.0 percent per year in the United States. Use graphical analysis of ‘present goods’ versus ‘future goods’ to explain the difference between China's growth rate and the U.S. growth rate.

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.

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Refer to the following production possibilities table for consumer goods (automobiles) and capital goods (forklifts).

  1. Show these data graphically. Upon what specific assumptions is this production possibilities curve based?
  2. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length?
  3. If the economy characterized by this production possibilities table and curve is producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources?
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Production Alternatives

Type of Production

A

B

C

D

E

Automobiles

0

2

4

6

8

Forklifts

30

27

21

12

0

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

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