A profit-maximizing firm produces apples, and its production function is y = f(L) = 12 L...

 

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A profit-maximizing firm produces apples, and its production function is y = f(L) = 12 L where L is the level of labor. Suppose the wage is w = 1. The price of one apple is denoted by pa.¹ 1 1. Determine the marginal product of labor. Does the production function exhibit dimin- ishing marginal product? Explain why. 2. Write down the profit maximization problem. Find the optimal production level y* (Pa). Plot the (inverse) supply curve. A profit-maximizing firm produces apples, and its production function is y = f(L) = 12 L where L is the level of labor. Suppose the wage is w = 1. The price of one apple is denoted by pa.¹ 1 1. Determine the marginal product of labor. Does the production function exhibit dimin- ishing marginal product? Explain why. 2. Write down the profit maximization problem. Find the optimal production level y* (Pa). Plot the (inverse) supply curve.