Last week, the Fur Salon signed and pre-paid a one-year leasing contract for 27 machines. Equipment therefore is now a fixed input at the Salon. b) Substitute the number of machines in the Fur Salon’s production function to find the expression The Fur Salon’s Short Run production function qSR(L). c) In the short run, to produce 20 artificial coats, how many units of labor does the Fur Salon need to employ? Explain your reasoning.
Last week, the Fur Salon signed and pre-paid a one-year leasing contract for 27 machines. Equipment therefore is now a fixed input at the Salon. b) Substitute the number of machines in the Fur Salon’s production function to find the expression The Fur Salon’s Short Run production function qSR(L). c) In the short run, to produce 20 artificial coats, how many units of labor does the Fur Salon need to employ? Explain your reasoning.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Last week, the Fur Salon signed and pre-paid a one-year leasing contract for 27 machines. Equipment therefore is now a fixed input at the Salon.
b) Substitute the number of machines in the Fur Salon’s production function to find the expression The Fur Salon’s Short Run production function qSR(L).
c) In the short run, to produce 20 artificial coats, how many units of labor does the Fur Salon need to employ? Explain your reasoning.
d) What is the expression of the Fur Coat’s short run conditional demand for labor (keep in mind that this is a function of the output level q)? What is the expression of the Fur Coat’s labor demand? (keep in mind that this is a function of the output price p and the wage rate w)?
Transcribed Image Text:The Fur Salon uses labor and equipment to produce artificial fur coats according to the production function q(L,K)= L?/3K?/3 .
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