Problem 3 Frank has hired two workers (Charlie and Mac) to assemble protein drinks for his company. Char- lie's marginal

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Problem 3 Frank Has Hired Two Workers Charlie And Mac To Assemble Protein Drinks For His Company Char Lie S Marginal 1 (30.75 KiB) Viewed 53 times

Problem 3 Frank has hired two workers (Charlie and Mac) to assemble protein drinks for his company. Char- lie's marginal cost to produce is MCc = 2D, and Mac's marginal cost to produce is MCM = 0.2D where D is the number of protein drinks produced per hour. (a) Let's start by assuming that Frank offers a piece rate. If that was true, how much would Charlie produce in an 8-hour workday? What about Mac? What would they get paid for an 8-hour workday? (b) Now, let's assume Frank is offering a time rate of $12 per hour, but both workers must make at least 1 drink per hour or they will be fired. How many drinks will each make in an 8-hour workday? What would they get paid for an 8-hour workday? (c) Who prefers the time rate system? Who prefers the piece rate system? (d) Assuming that Frank needs to spend $1 worth of his time for every rink produced to make sure it was made correctly, which type does he prefer? Hint: Think about the average costs.