Suppose that the wage rate is $16 per hour and the price of the product is $2.
Question:
QL
0 ………………………….0
20 ………………………….1
35 ………………………….2
47 ………………………….3
57 ………………………….4
65 ………………………….5
70 ………………………….6
a. Find the profit-maximizing quantity of labor.
b. Suppose that the price of the product remains at $2 but that the wage rate increases to $21. Find the new profit-maximizing level of L.
c. Suppose that the price of the product increases to $3 and the wage remains at $16 per hour. Find the new profit-maximizing L.
d. Suppose that the price of the product remains at $2 and the wage at $16, but that there is a technological breakthrough that increases output by 25% for any given level of labor. Find the new profit-maximizing L.
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a From the information given above calculate the marginal product of labor the extra output produced by hiring one more unit of labor and then multipl...View the full answer
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