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Microeconomic Theory

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.7P

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Question

A firm produces its product using only labor. Its production function is Q= 20L -L, where Qis the number of units of output produced and Lis the number of labor hours used.
The firm purchases labor in a competitive labor market at the going wage rate of w = $12 per hour. The firm sells its output in a competitive market at the market price of P= $5.
To maximize profit, the firm should use
hours of labor and produce
units of output. (Enter your responses rounded to two decimal places.)

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