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Consider a firm which is perfectly competitive in both product and labour markets. Suppose the product price is p3$1.21, wage is w=$11, and the production function is Q=L(32-L). For this production function MPL=32-2L A. Write down an expression for the firm's revenue minus cost (i.e. its profit). Note there is only one input here, you can consider that this firm does not use capital or that the production function given is for a fixed level of capital in the short run). B. Write the formula for this firm's MRP. Graphed with the conventional axes for economics, the slope of this curve is For this firm, the marginal cost of labour is equal to C. Write the conditions for this firm's profit-maximizing amount of labour. This firm will choose L*= and the corresponding maximum level of profit is equal to Compare the maximum profit to the profit at L*+1. D. When the firm employs L* units of labour, the marginal revenue product of labour is and the value marginal product of labour is

Consider a firm which is perfectly competitive in both product and labour markets. Suppose the product price is p3$1.21, wage is w=$11, and the production function is Q=L(32-L). For this production function MPL=32-2L A. Write down an expression for the firm's revenue minus cost (i.e. its profit). Note there is only one input here, you can consider that this firm does not use capital or that the production function given is for a fixed level of capital in the short run). B. Write the formula for this firm's MRP. Graphed with the conventional axes for economics, the slope of this curve is For this firm, the marginal cost of labour is equal to C. Write the conditions for this firm's profit-maximizing amount of labour. This firm will choose L*= and the corresponding maximum level of profit is equal to Compare the maximum profit to the profit at L*+1. D. When the firm employs L* units of labour, the marginal revenue product of labour is and the value marginal product of labour is

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider a firm which is perfectly competitive in both product and labour markets. Suppose the product price is p=$1.21, wage is w=$11, and the production function is Q=L(32-L). For this production function MPL=32-2L A. Write down an expression for the firm's revenue minus cost (i.e. its profit). Note there is only one input here, you can consider that this firm does not use capital or that the production function given is for a fixed level of capital in the short run). B. Write the formula for this firm's MRP. Graphed with the conventional axes for economics, the slope of this curve is For this firm, the marginal cost of labour is equal to C. Write the conditions for this firm's profit-maximizing amount of labour. This firm will choose L*= and the corresponding maximum level of profit is equal to . Compare the maximum profit to the profit at L*+1. D. When the firm employs L* units of labour, the marginal revenue product of labour is and the value marginal product of labour is
Transcribed Image Text:Consider a firm which is perfectly competitive in both product and labour markets. Suppose the product price is p=$1.21, wage is w=$11, and the production function is Q=L(32-L). For this production function MPL=32-2L A. Write down an expression for the firm's revenue minus cost (i.e. its profit). Note there is only one input here, you can consider that this firm does not use capital or that the production function given is for a fixed level of capital in the short run). B. Write the formula for this firm's MRP. Graphed with the conventional axes for economics, the slope of this curve is For this firm, the marginal cost of labour is equal to C. Write the conditions for this firm's profit-maximizing amount of labour. This firm will choose L*= and the corresponding maximum level of profit is equal to . Compare the maximum profit to the profit at L*+1. D. When the firm employs L* units of labour, the marginal revenue product of labour is and the value marginal product of labour is
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