The firm uses 15 units of K, Price of K=$400 per unit; Price of good = $100; Wage per worker $40,000
L
Q
1
800
2
1900
3
2700
4
3350
5
3775
6
4100
- . Does this represent the SR or LR? Explain.
- . What is the optimal number of workers this firm will hire?
- . What are the profits of this number of workers?
- . Is the underlying cost curve for this firm quadratic or cubic? Explain?
The firm uses 15 units of K, Price of K=$400 per unit; Price of good = $100; Wage per worker $40,000
| L | Q |
| 1 | 800 |
| 2 | 1900 |
| 3 | 2700 |
| 4 | 3350 |
| 5 | 3775 |
| 6 | 4100 |
- . Does this represent the SR or LR? Explain.
- . What is the optimal number of workers this firm will hire?
- . What are the profits of this number of workers?
- . Is the underlying cost curve for this firm quadratic or cubic? Explain?
Related textbook solutions
Related questions
Assume that the firm only uses labor as a resource in production and is hiring workers in a purely competitive labor market. In other words, the firm can hire as many workers as it wishes without affecting the equilibrium wage rate.
|
Units of Labor (L) |
Total Product (Q) |
Product Price (P) |
Total Revenue (TR) |
Marginal Revenue Product (MRP) |
|
0 |
0 |
$2.20 |
$0 |
--- |
|
1 |
15 |
$2.00 |
$30 |
$30 |
|
2 |
28 |
$1.80 |
||
|
3 |
39 |
$1.60 |
||
|
4 |
48 |
$1.40 |
||
|
5 |
55 |
$1.20 |
||
|
6 |
60 |
$1.10 |
a. Is the firm selling its product in a purely competitive market or an imperfectly competitive market?
b. Fill out both the TR and MRP columns with the correct values.
c. Suppose the wage rate is $11.00 per worker. How many workers should be employed, in order to maximize profits?
d. If the firm hires the optimum number of workers, what is its total profit?
