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Subway restaurants require labor to produce output. The number of workers to hire is often an important decision of Subway because it affects the costs and profits of the firm.

1.) Discuss two factors that would increase your demand for labor.

2.) Is labor an fixed or variable cost in the short run? What are the fixed costs of your firm?

3.) Explain the law of diminishing returns in your own words. This idea can be applied to other concepts in economics. Think about your own utility from consumption. Give a personal example of diminishing utility.

4.) How is wage determined in any market?

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Subway restaurants require labor to produce output. The number of workers to hire is often an important decision of Subway because it affects the costs and profits of the firm.

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1.) Discuss two factors that would increase your demand for labor.

One of the main factors that would increase demand for labor at my restaurant is increased demand for my products. If the footfall in the restaurant increases, I will have to hire more workers at my restaurant to meet the increasing demand as existing staff will not be able to handle higher volume and thus, it will become necessary to hire additional labor to capitalize on growth and revenue earning opportunities. I will also need to hire additional labor if I decide to open my stores for higher duration, say till late in the night. In such a case, I will have to hire additional workers to work during night shifts.

Further, the demand for labor will also increase if I decide to introduce new products that require ...

Solution provided by:
Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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