Question Labour is a variable input into the production process. In this sense, a change the amount of labour used in production (the number of employee hours) lead to proportionate change in labour costs. However, some other labour-related costs may als Occur. a) Define "quasi-fixed costs" and give three examples of them. b) Assume a t-period of setting. Write down the mathematical expression that describes the profit-maximizing employment rule of a firm when there exist quasi-fixed costs. Explain what this expression means. c) Consider a firm that only exists for one period. The value of labour's (L) marginal product is given by VMPL = P × MP₁, where P is the price of output, and MPL = 10 - 0.5L. The wage rate is $10. Assume that there are no hiring or training costs. If the firm expects the price of output to be $10, what is the optimal level of

Question Labour is a variable input into the production process. In this sense, a change the amount of labour used in production (the number of employee hours) lead to proportionate change in labour costs. However, some other labour-related costs may als Occur. a) Define "quasi-fixed costs" and give three examples of them. b) Assume a t-period of setting. Write down the mathematical expression that describes the profit-maximizing employment rule of a firm when there exist quasi-fixed costs. Explain what this expression means. c) Consider a firm that only exists for one period. The value of labour's (L) marginal product is given by VMPL = P × MP₁, where P is the price of output, and MPL = 10 - 0.5L. The wage rate is $10. Assume that there are no hiring or training costs. If the firm expects the price of output to be $10, what is the optimal level of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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