Answer to Question #106687 in Economics for max knorp

Question

THIS IS A LONG RUN QUESTION; take your calculations to three (3) decimal places. You manage a dog-walking business. You have 2 inputs, "experienced dog-walkers" and "intern dog-walkers". Your output is “dogs walked”. Your experienced walkers are able to walk more dogs per day than the interns can; the experienced walkers each walk 12 dogs a day, so the MPEXPERIENCED is 12. Intern walkers each walk 8 dogs a day, so the MPINTERNS is 8. The experienced walkers are paid $80 per day and the intern walkers are paid $60 per day. You are currently using 3 of each, 3 experienced walkers and 3 interns. Which of the following is correct?

Answer 1

The output is maximized if $MP1/w1 = MP2/w2.$

In our case $MPexp/w = 12/80 = 0.15$ , and $MPint/w = 8/60 = 0.133.$

So, we should use more experienced workers and less interns.