A. Consider a firm who sells output at p=10 and has a short run production function Q(L)=20L-L². Its wage rate is w=40. 1. Suppose the firm sells in a perfectly competitive market and is a price taker in the input market, how much labor will it hire to maximize profits? 2. How much wage will it pay? 3. Show the graph of the profit-maximizing level of L and w solved in 1&2.

A. Consider a firm who sells output at p=10 and has a short run production function Q(L)=20L-L². Its wage rate is w=40. 1. Suppose the firm sells in a perfectly competitive market and is a price taker in the input market, how much labor will it hire to maximize profits? 2. How much wage will it pay? 3. Show the graph of the profit-maximizing level of L and w solved in 1&2.

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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A. Consider a firm who sells output at p=10 and has a short run production function Q(L)=20L-L2. Its wage rate is w=40. Suppose the firm sells in a perfectly competitive market and is a price taker in the input market, how much labor will it hire to maximize profits?
Consider the following shortrun production function: Q =100L - L2 where Q is the output level and L is labour input. If the price of output in the market is K.sh 50 and labour costs K.sh 1200 per hour, how many hours would the firm use to maximize profits. What is the profit maximizing level of output?
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Suppose that John is a shrubber. As a master shrubber, he hires apprentices, L, at wage w and purchases capital, K, (electric shrubbery trimmers, for example) to create his high-end shrubberies. Capital is expensive, so he generally borrows money to purchase the equipment. The cost of capital is r. John can produce shrubberies according to the production function q = 10 · K^1/4 L^1/4. We can assume John is a price taker. If wages are $10/hour, the cost of capital is $40/hour, and shrubberies sell for p = $160, how many shrubberies will John produce and sell? How much labor and capital will he purchase to produce that output? What are his profits?
Widget factory Inc. in Wisconsin has the following production function: F(L,K)=2L L represents the number of labours hours. Workers at this factory are paid an hourly wage of $30 and they rent capital at$25/ hour.since this is a competitive market, the factory output is $50 per unit. Let's pretend the firm operates in the short run with capital fixed at 900, how many workers would widget factory Inc employ? What is their profit rate?
Consider the following shortrun production function: (Q=100L- L*L), where Q is the output level and L is labour input If the price of output in the market is K.sh 50 and labour costs K.sh 1200 per hour, how many hours would the firm use to maximize profits. What is the profit maximizing level of output?
Widget factory Inc. in Wisconsin has the following production function: F(L,K) = 2L1/2 K1/2 L represent the number of labour hours. Workers at this factory are paid an hourly wage of $30 and they rent capital at $25/hour. Since this is a competitive market, the factory output the factory gets per is output is $50 per unit. Let's pretend the firm operates in the short run with capital fixed at 900, how many factory workers would Widget Factory Inc employ? What is their profit rate?