Question: Question 3 (10 marks): Suppose the hourly wage is SIO and the price of each unit of capital is $25. The (a) price of

Question 3 (10 marks): Suppose the hourly wage is SIO and the price of each unit of capital is $25. The (a) price of output is constant at $50 per unit. The production function is = NhK h, so that the marginal product of labor is MPN = 'h If the current capital stock is fixed at 1 ,600 units, how much labor should the firm employ in the short run? How much profit will the firm earn?

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