Attempts Average / 4 2. The firm's problem Consider a competitive firm that produces bots. Labor (_) and capital (K) are the only two inputs of production; each unit of labor is paid the market wage (w), and each unit of capital is rented at the rental price of capital (r). Output (q) is therefore a function of labor and capital, or q = f (K, L), and is sold at the market price (P) The goal of this firm is to maximize profit given the price of bots, the wage rate, the rental rate of capital, and production technology by choosing its labor and capital inputs. Fill in the following equations with the firm's profit maximization problem: Profit - Revenue Labor Cost - Capital Cost \\ PF(K, L) LL KV Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MP_). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is and the change in cost is Firms will continue to hire workers until the change in profit is . Given this condition, which of the following equations correctly describes the profit-maximizing labor choice of the firm? O MPL = P O MPL = W X P O w - MPL O MPL - Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $22. Moreover, suppose the marginal product of labor for this firm is equal to the following:Fill in the following equations with the firm's profit maximization problem: Profit - Revenue - Labor Cost - Capital Cost Pf (K, L) - wL -TK Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MP_). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is , and the change in cost is Firms will continue to hire workers until the change in profit is . Given this condition, which of the following equations correctly describes the profit-maximizing labor choice of the firm? positive O MA= equal to zero O MPL - WX P negative MP O w = = O MPL - T Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $22. Moreover, suppose the marginal product of labor for this firm is equal to the following: I - 20 - L In this case, the real wage rate is bots per unit of labor, and the firm will hire units of labor.Fill in the following equations with the firm's profit maximization problem: Profit - Revenue - Labor Cost - Capital Cost Pf (K, L) - work Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MP_). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is . and the change in cost is MPL. tinue to hire workers until the change in profit is . Given this condition, which of the following equations correctly P x MP. profit-maximizing labor choice of the firm? Pxq MP. MP P PL = UX P MP P O MPL - T Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $22. Moreover, suppose the marginal product of labor for this firm is equal to the following: MPI - 20 - L bots per unit of labor, and the firm will hire units of labor. In this case, the real wage rate isFill in the following equations with the firm's profit maximization problem: Profit - Revenue - Labor Cost - Capital Cost Pf ( K. L) _ WALK Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MPz ). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is and the change in cost is Firms will continue to hire workers until the ofit is . Given this condition, which of the following equations correctly describes the profit-maximizing labor choice w X Y O MPL = O MPL = w x P w x MPL O u =: MPL O MPL Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $22. Moreover, suppose the marginal product of labor for this firm is equal to the following: MP, - 20 - Lfrom hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra u marginal product of labor ( MP_ ). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is and the change in cost is Firms will continue to hire workers until the change in profit is Given this condition, which of the following equations correctly describes the profit-maximizing labor choice of the firm? O MP. = D O MPI = wx P OU = MP P Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $22. Moreover, suppose the marginal product of labor for this firm is equal to the following: MP - 20 - L In this case, the real wage rate is bots per unit of labor, and the firm will hire units of labor