Ask Question
5 June, 17:37

Acme, Inc., supplies rocket ships to the retail market and hires workers to assemble the components. A rocket ship sells for $35,000, and Acme can buy the components for each rocket ship for $25,000. Wiley and Sam are two workers for Acme. Sam can assemble 1/5 of a rocket ship per month and Wiley can assemble 1/10. If the labor market is perfectly competitive and rocket components are Acme's only other cost, how much will Sam and Wiley be paid?

+3
Answers (1)
  1. 5 June, 20:34
    0
    Sam payment=$1,000

    Acme payment=$500

    Explanation:

    In a perfectly competitive labor market, the cost of labor is determined by the market as opposed to the companies. This means that each laborer will be paid according to his/her productivity.

    Step 1: Calculate profits per unit

    Profit=sales revenue-cost of goods

    where;

    sales revenue=$35,000

    cost of goods sold=$25,000

    replacing;

    Profit = (35,000-25,000) = $10,000

    Step 2: Determine share of profit for Sam and Wiley

    Sam payment=level of productivity per ship*profit

    where;

    level of productivity per ship=1/5

    profit=$5,000

    replacing;

    Sam payment = (1/5) * 5,000=$1,000

    Acme payment=level of productivity per ship*profit

    where;

    level of productivity per ship=1/10

    profit=$5,000

    replacing;

    Acme payment = (1/10) * 5,000=$500
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Acme, Inc., supplies rocket ships to the retail market and hires workers to assemble the components. A rocket ship sells for $35,000, and ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers