Reference no: EM131217573

Suppose you own a piece of land on which you need 800 units of work to be performed using labour. You can hire all the workers you want, but you are told that each worker has an S-Shaped capacitycurve. Specifically, capacity is zero for the first $10 of income, it increases by 2 units for each additionalunit of income up to a total income of $ 50. After this point capacity increases by 1 unit for each unit ofadditional income up to a total income of $ 100. Any additional income above $ 100 does not generateadditional capacity. Assume that all income you pay to the workers is spent on nutrition.

a) Draw the capacity curve for one worker with capacity in units of work on the vertical axis and incomeon the horizontal axis.

b) Assume that you want to minimize your total cost of completing 1000 units of work. How manyworkers would you hire and how much would you pay each of them.