Pietro is a manager at a carwash. He has hired 10 workers to wash ...

[sdfghj]

Pietro is a manager at a carwash. He has hired 10 workers to wash and detail cars for him and is considering what type of payment scheme he should set up for his workers.
 
  He can pay each of his workers 9 per hour to wash and detail cars, or he can pay his workers 12 for each car a worker washes and details. (It takes 75 minutes, on average, for an employee to wash and detail a car.) If Pietro wants to maximize the number of cars his workers wash and detail in one day, which payment scheme should he use? Explain.

Question 2

Prove that the total cost curve and the total variable cost curve have the same slope.
 
  What will be an ideal response?

[chinwesucks]

Answer to Question 1

If Pietro wants to maximize the number of cars his workers wash and detail in one day, he should pay them 12 for each car so that workers also will have an incentive to wash and detail as many cars as possible. However, if the workers are rushing through their work, it is likely that the cars will not be washed and detailed properly.

Answer to Question 2

Total cost is achieved by adding TFC to TVC. This means adding the same amount of total fixed cost to every level of total variable cost. Thus, the total cost curve has the same shape as the total variable cost curve; it is simply higher by an amount equal to TFC.