Question: consider the following production function Consider the following production function: Q = 40 K XL, where O = number of units produced per hour, K

consider the following production function

Consider the following production function: Q = 40 K XL, where O = number of units produced per hour, K = units of capital employed, L = number of workers. The firm has K = 100 units of capital. 1. Write down the marginal product of labour MPz (the book calls it MPP) function. 2. If the firm is a perfect competitor in the market for output, and sells the product at price P = $10/unit, what is the firm's demand for labour (i.e., the function that tells you the number of workers hired as the function of the wages per worker, w)? 3. How many workers will be hired if w = $8.00/hr? How many workers will be hired if w = $10.00/hr? 4. If the product price increases to P= $12/unit, what is the firm's new demand for labour? 5. How many workers will be hired now (at P = $12/unit) if w = $8.00/hr? 6. Illustrate this change in demand (due to the change in the price of output, ceteris paribus) graphically (carefully show the numbers on the graph)

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