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QUESTION

Joe Fixit has an appliance repair business. He has more business than he can handle and wants to hire another repair person.

Joe Fixit has an appliance repair business. He has more business than he can handle and wants to hire another repair person. Joe estimates that three appliances can be repaired each hour by a qualified person. Joe bills out labor at $45 per hour, but he stipulates that the minimum charge for appliance repair estimates is $30 plus parts. What is the marginal revenue product of a qualified repair person? What is the maximum hourly wage that he would pay an employee?

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