Dirt Diggers (DD) is a firm that excavates roadside ditches for laying drainpipe. Its output follows...

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Dirt Diggers (DD) is a firm that excavates roadside ditches for laying drainpipe. Its output follows the production function: Q = 10L -.1L², where L denotes labor hours and Q the length of the ditch in meters. The firm hires labor at a wage of $12 per hour. a) DD has received an offer to excavate 250 meters for a price of $500. Should it accept the offer? (3) b) Answer part a assuming that DD is offered as much or as little excavation work as it desires at a price of $2.00 per meter dug. (4) Dirt Diggers (DD) is a firm that excavates roadside ditches for laying drainpipe. Its output follows the production function: Q = 10L -.1L², where L denotes labor hours and Q the length of the ditch in meters. The firm hires labor at a wage of $12 per hour. a) DD has received an offer to excavate 250 meters for a price of $500. Should it accept the offer? (3) b) Answer part a assuming that DD is offered as much or as little excavation work as it desires at a price of $2.00 per meter dug. (4)

Answer rating: 100% (QA)

a DD should accept the offer Total cost of labor 10L 01L2 x 12 1... View the full answer