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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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