Suppose the hourly wage is $20 and the price of each unit of capital is $2. The price of output is constant at $20/unit. The production function and marginal product function, respectively, are shown below. If the current capital stock is fixed at 2,500 units, how much labor should the firm employ in the short run? Show your work. The equation presented is:\[ MP_E = \frac{1}{2} \left( \frac{K}{E} \right)^{\frac{1}{2}} \]This formula seems to describe a mathematical relationship where:- $ MP_E $ could represent a particular measure or index in a specific context, such as marginal productivity or another economic or scientific variable.- $ K $ and $ E $ are variables or parameters involved in this relationship.The expression $\left( \frac{K}{E} \right)^{\frac{1}{2}}$ indicates taking the square root of the ratio of $ K $ to $ E $.Understanding the specific context or field in which this equation applies is crucial for its practical interpretation and application. The equation displayed is:\[ f(E, K) = \frac{1}{E^{\frac{1}{2}} K^{\frac{1}{2}}} \]This mathematical expression represents a function $ f(E, K) $ that depends on two variables, $ E $ and $ K $. The function is defined as the reciprocal of the square root of the product of $ E $ and $ K $. This could describe a variety of scientific or mathematical relationships, often related to rates or efficiencies involving these two variables.

A production function represents the relationship between the quantities of factors of production to…

Suppose the hourly wage is $20 and the price of each unit of capital is $2. The price of output is constant at $20/unit. The production function and marginal product function, respectively, are shown below. If the current capital stock is fixed at 2,500 units, how much labor should the firm employ in the short run? Show your work

Suppose the hourly wage is $20 and the price of each unit of capital is $2. The price of output is constant at $20/unit. The production function and marginal product function, respectively, are shown below. If the current capital stock is fixed at 2,500 units, how much labor should the firm employ in the short run? Show your work

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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