A clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll.The last doctor hired treated 1,600 extra patients in a year,while the last nurse hired treated 1,000 extra patients in a year.If doctors make $40,000 a year,what do nurses make?
A)$25,000 a year
B)$20,000 a year
C)$15,000 a year
D)$10,000 a year

Question

Quizplus · Accepted Answer

The clinic is optimizing its payroll to treat the maximum number of patients, which means it is equalizing the marginal productivity per dollar spent on each type of employee. The last doctor hired treated 1,600 extra patients for $40,000, which is a rate of 40 patients per $1,000. To maintain this optimal allocation, the last nurse hired must also treat 40 patients per $1,000. Since the last nurse treated 1,000 extra patients, and at the rate of 40 patients per $1,000, the nurse's salary must be $25,000 to match the productivity per dollar spent on doctors.

A Clinic Uses Doctors and Nurses Optimally and Is Servicing