Suppose that a firm's production function is given by: Q=12L-L², for L=0 to 6, where L is labor input per day and Q is output per day. Derive and draw the firm's demand for labor if the firm's output sells for $10 in a competitive market. The marginal product of labor (MPL) is 12-2L. Using the line drawing tool, draw the firm's labor demand curve. Label this curve DL. Carefully follow the instructions above, and only draw the required objects.
Suppose that a firm's production function is given by: Q=12L-L², for L=0 to 6, where L is labor input per day and Q is output per day. Derive and draw the firm's demand for labor if the firm's output sells for $10 in a competitive market. The marginal product of labor (MPL) is 12-2L. Using the line drawing tool, draw the firm's labor demand curve. Label this curve DL. Carefully follow the instructions above, and only draw the required objects.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose that a firm's production function is given by:
Q=12L-L²,
for L = 0 to 6, where L is labor input per day and Q output per day.
Derive and draw the firm's demand for labor if the firm's output sells for
$10 in a competitive market.
The marginal product of labor (MPL) is 12-2L.
Using the line drawing tool, draw the firm's labor demand curve. Label
this curve D₁.
Carefully follow the instructions above, and only draw the required
objects.
C
Price of labor
150-
140-
130-
120-
110-
100-
90-
80-
70-
60-
50-
40-
30-
20-
10-
0-
0
1
5
Quantity of labor (hours)
8
9
10
Transcribed Image Text:A firm produces its product using only labor. Its production function is Q=20L-L², where Q is the number of units of output produced and L is 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 = $7.
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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