Question: A purely competitive firm has a single variable input L (labor), with the wage rate W0 per period. Its fixed inputs cost the firm a

A purely competitive firm has a single variable input L (labor), with the wage rate W0 per period. Its fixed inputs cost the firm a total of F dollars per period. The price of the product is P0.

A. Write the production function, revenue function, cost function, and profit function of the firm.

B. What is the first-order condition for profit maximization? Give this condition an economic interpretation.

C. What economic circumstances would ensure that profit is maximized rather than minimized?

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