Couldn't post the picture so I hope this works, answer as soon as possible thank you. A wood factory...

 

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Couldn't post the picture so I hope this works, answer as soon as possible thank you. A wood factory initially produce wood chairs (Q) manually with I units of labour employed and without using any machinery. That is, Q=f(L)= L And per unit price of chair is p and per unit wage is w. 1) Construct a profit function and find the optimal level of labour input (L*) for profit maximization. 2) Suppose this manager tries to figure out how the optimal level of labour demand (L*) would change when w varies. What is your finding? 3) Now the government wants to subsidize the firm's employment to promote national economy with subsidy rate s <w (per employed labour unit). Write the new profit function and find the new optimal level of labour (L**). Date: Nov. 14th, 2021 4) How does your new optimal profit (**) react to a change in the price p? 5) How does the new optimal level of employment (L**) react to a change in the subsidy rate?

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The production function is Q f L L 2 The per unit price of chair is View the full answer