Consider the following short-run production function (where L – labour, Q - output): Q = 10L - 0.5L^2Suppose that output can be sold for $10 per unit. Also assume that the firm can obtain as much of the variable input as it needs at $20 per unit.Determine the marginal value of product with respect to labour.Determine the marginal cost of labour (factor cost function).Determine the optimal value of L, given that the objective is to maximize profits.
Consider the following short-run production function (where L – labour, Q - output): Q = 10L - 0.5L^2Suppose that output can be sold for $10 per unit. Also assume that the firm can obtain as much of the variable input as it needs at $20 per unit.Determine the marginal value of product with respect to labour.Determine the marginal cost of labour (factor cost function).Determine the optimal value of L, given that the objective is to maximize profits.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter7: Production Economics
Section: Chapter Questions
Problem 6E
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Consider the following short-run production function (where L – labour, Q - output):
Q = 10L - 0.5L^2
Suppose that output can be sold for $10 per unit. Also assume that the firm can obtain as much of the variable input as it needs at $20 per unit.
Determine the marginal value of product with respect to labour.
Determine the marginal cost of labour (factor cost function).
Determine the optimal value of L, given that the objective is to maximize profits.
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