Where L is the only variable input, suppose that on a daily basis the short-run total product curve for a firm is TP, = Q = 50L-0.1L2. The firm must pay a fixed price of $130 a unit (one worker day) for labor, so that MC, = 130. It sells in a per- fectly competitive market (see definition in Chapter 1) and can sell all of the product it wants to for $20 per unit. It uses only labor and materials to produce output, and the materials cost per output unit is $7. Determine: %3D %3D %3D a. The maximum short-run output the firm can produce. b. The output that is consistent with optimal use of the variable input L.

Where L is the only variable input, suppose that on a daily basis the short-run total product curve for a firm is TP, = Q = 50L-0.1L2. The firm must pay a fixed price of $130 a unit (one worker day) for labor, so that MC, = 130. It sells in a per- fectly competitive market (see definition in Chapter 1) and can sell all of the product it wants to for $20 per unit. It uses only labor and materials to produce output, and the materials cost per output unit is $7. Determine: %3D %3D %3D a. The maximum short-run output the firm can produce. b. The output that is consistent with optimal use of the variable input L.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter26: Factor Markets: With Emphasis On The Labor Market

Section26.1: Factor Markets

Problem 1ST

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Question

e C7. Where L is the only variable input, suppose that on a daily basis the short-run
total product curve for a firm is TP, = Q = 50L-0.1L2. The firm must pay a fixed
price of $130 a unit (one worker day) for labor, so that MC, = 130. It sells in a per-
fectly competitive market (see definition in Chapter 1) and can sell all of the
product it wants to for $20 per unit. It uses only labor and materials to produce
output, and the materials cost per output unit is $7. Determine:
%3D
a. The maximum short-run output the firm can produce.
b. The output that is consistent with optimal use of the variable input L.

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