Units of Labor Units of Output0 01 72 133 184 225 23
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3. (24 points) Suppose a competitive firm can sell its output for$5 per unit. The following table gives the firm's short-run production function.Labor Output0 01 602 1303 1804 2205 2506 260In the table below, you will determine several points on the firm's demand curve for labor. To do this, you must determine how many workers the firm should hire for different wage rate values to maximize profit. Complete the table below:Wage Rate Per Worker Quantity Demanded of Workers$45?$75$225$270$320$340
Suppose there are two inputs in the production function, labor and capital, and these two inputs are perfect substitutes. The existing technology permits 1 machine to do the work of 3 workers. The firm wants to produce 100 units of output. Suppose the price of capital is $750 per machine per week. What combination of inputs will the firm use if the weekly salary of each worker is $300? What combination of inputs will the firm use if the weekly salary of each worker is $225? What is the elasticity of labor demand as the wage falls from $300 to $225?
