The firm uses 15 units of K, Price of K = $400 per unit, Price of good =$100; Wage per worker =$40,000 L Q 1 800 2 1900 3 2700 4 3350 5 3775 6 4100
A. Does this represent the SR or LR? Explain.
B. What is the optimal number of workers this firm will hire?
C. What is the profits at this number of workers?
D. Is the underlying total cost curve for this firm quadratic or cubic? Explain.
The firm uses 15 units of K, Price of K = $400 per unit, Price of good =$100; Wage per worker =$40,000 L Q 1 800 2 1900 3 2700 4 3350 5 3775 6 4100
A. Does this represent the SR or LR? Explain.
B. What is the optimal number of workers this firm will hire?
C. What is the profits at this number of workers?
D. Is the underlying total cost curve for this firm quadratic or cubic? Explain.
Related textbook solutions
Related questions
The firm uses 15 units of K, Price of K=$400 per unit; Price of good = $100; Wage per worker $40,000
| L | Q |
| 1 | 800 |
| 2 | 1900 |
| 3 | 2700 |
| 4 | 3350 |
| 5 | 3775 |
| 6 | 4100 |
- . Does this represent the SR or LR? Explain.
- . What is the optimal number of workers this firm will hire?
- . What are the profits of this number of workers?
- . Is the underlying cost curve for this firm quadratic or cubic? Explain?
Assume that the firm only uses labor as a resource in production and is hiring workers in a purely competitive labor market. In other words, the firm can hire as many workers as it wishes without affecting the equilibrium wage rate.
|
Units of Labor (L) |
Total Product (Q) |
Product Price (P) |
Total Revenue (TR) |
Marginal Revenue Product (MRP) |
|
0 |
0 |
$2.20 |
$0 |
--- |
|
1 |
15 |
$2.00 |
$30 |
$30 |
|
2 |
28 |
$1.80 |
||
|
3 |
39 |
$1.60 |
||
|
4 |
48 |
$1.40 |
||
|
5 |
55 |
$1.20 |
||
|
6 |
60 |
$1.10 |
a. Is the firm selling its product in a purely competitive market or an imperfectly competitive market?
b. Fill out both the TR and MRP columns with the correct values.
c. Suppose the wage rate is $11.00 per worker. How many workers should be employed, in order to maximize profits?
d. If the firm hires the optimum number of workers, what is its total profit?
