## (Solved) Problem 8. The figure shows the relationship between the number of mechanics hired and the number of car repairs performed per day at a car-repair

questions attached.

Problem 8. The figure shows the relationship between the number of mechanics hired and the
number of car repairs performed per day at a car-repair shop. a. The economic relationship depicted on the graph is called?
b. What is the marginal product of the third mechanic?
c. If the shop charges \$150 per repair, then what is the value of the marginal product of the
second mechanic?
d. If the shop charges \$150 per repair and pays each of its mechanics a wage of \$700 per
day, then what is the marginal profit of the second mechanic?
e. Suppose the shop charges \$125 per repair. Over what interval of wages, W, would the
shop maximize its profit by hiring exactly 4 mechanics? (Determine W1 and W2 such that W1
&lt; W &lt; W2.) 1

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