The number of workers helps to determine their volume of business
because better service to customers attracts new customers and slow
service turns people away. The average meal sells for $2.00

Construct a marginal revenue product table devived from the number of
floor help in a market hour.
How many people should you have on staff at a daily wage of $10.00 per
hour?
What is the highest daily wage you should pay for three people in a
market period? What is the most unrealistic assumption?

Workers   Meals
   0        0
   1        16
   2        24
   3        30
   4        34
   5        36

Hi douger-ga,

To answer your questions, we need to construct the marginal revenue
product table first:

Marginal revenue is calculated by multiplying the number of meals by
the revenue gained by selling each meal.
Formula: (change in revenue/change in meals)

Marginal cost is calculated by multiplying the number of workers by
the cost of a worker (in a market period - which is just an arbitrary
time period).
Formula: (workers*(cost/worker))

Workers	Meals	Marginal Revenue	Marginal Cost
0	0	$0			$0
1	16	$32			$10
2	24	$16			$10
3	30	$12			$10
4	34	$8			$10
5	36	$4			$10

In order to determine the number of workers that should be on staff,
we calculate the marginal profit for each row above (marginal revenue
- marginal cost):

Workers		Marginal Profit
0		$0
1		$22
2		$6
3		$2
4		-$2
5		-$6

From the table above, we can see that as we add workers, our marginal
profit is still positive (although decreasing) until a fourth worker
is added. Therefore, three workers should be on staff given the daily
wage level.

The upper limit on the daily wage that can be paid to three workers is
$20. Since it is projected that 30 meals will sell if there are three
workers, we have a total revenue of $60. Since paying the workers any
more than $20 would result in a loss, that is the most they can be
paid. The most unrealistic assumption in this case is that workers are
the only cost to the business. Fixed expenses such as rent, utilities,
equipment have not been considered. Variable expenses such as the cost
of the raw food materials needed to produce the meals has also not
been considered.

Hopefully you have found this answer to be helpful, but if you have
any questions about the information above, please post a clarification
before rating the answer and I will respond promptly :)

Cheers!

answerguru-ga

Very quick respons time and also very detailed.