Production function for a competitive firm is Q = K2/3 L1/2. The firm ...
guru2009 (Not rated)
(Not rated)
Production function for a competitive firm is Q = K2/3 L1/2. The firm sells its product at $100 in a competitive market and can hire labor at a constant rate of wage of $50 per unit of time. Capital is fixed at 8,000 units. Determine the profit maximizing quantity of labor (L).
8 years ago
w = $50 Since K = 8000, Q = (8000^(2/3)) L^(1/2) = 400 L^(1/2) Marginal product of labor = 400 * (1/2) L^(-1/2) = 200 L^(-1/2) MR = p = 100 Marginal revenue product of labor = Marginal product of labor * MR = 200 L^(-1/2) * 100 = 20000 L^(-1/2) Now, set 2
NOT RATED
Purchase the answer to view it
Thefirmsellsitsproductat100inacompetitivemarketandcanhirelaborataconstantrateofwageof.docx
