4. Suppose that low-skilled workers employed in clearing woodland can each clear one acre per month if each is equippedwith a shovel, a machete, and a chainsaw. Clearing one acrebrings in $1,000 in revenue. Each worker’s equipment coststhe worker’s employer $150 per month to rent and each workertoils 40 hours per week for four weeks each month. LO17.6 a. What is the marginal revenue product of hiring one lowskilled worker to clear woodland for one month?b. How much revenue per hour does each worker bring in?c. If the minimum wage were $6.20, would the revenue perhour in part b exceed the minimum wage? If so, by howmuch per hour?d. Now consider the employer’s total costs. These includethe equipment costs as well as a normal profit of $50 peracre. If the firm pays workers the minimum wage of$6.20 per hour, what will the firm’s economic profit orloss be per acre?e. At what value would the minimum wage have to be set sothat the firm would make zero economic profit fromemploying an additional low-skilled worker to clearwoodland?
4. Suppose that low-skilled workers employed in clearing woodland can each clear one acre per month if each is equipped
with a shovel, a machete, and a chainsaw. Clearing one acre
brings in $1,000 in revenue. Each worker’s equipment costs
the worker’s employer $150 per month to rent and each worker
toils 40 hours per week for four weeks each month. LO17.6
a. What is the marginal revenue product of hiring one lowskilled worker to clear woodland for one month?
b. How much revenue per hour does each worker bring in?
c. If the minimum wage were $6.20, would the revenue per
hour in part b exceed the minimum wage? If so, by how
much per hour?
d. Now consider the employer’s total costs. These include
the equipment costs as well as a normal profit of $50 per
acre. If the firm pays workers the minimum wage of
$6.20 per hour, what will the firm’s economic profit or
loss be per acre?
e. At what value would the minimum wage have to be set so
that the firm would make zero economic profit from
employing an additional low-skilled worker to clear
woodland?
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