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Home Q & A Board Other Fields Homework Help Business Economics
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PaulKet PaulKet
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6 years ago
A firm that only employs labor (L) has the following production function:
      f(L) = 20L - L2
Let the price of output be normalized to one and the price of labor (relative to output price) is w.
a.   Write out the profit function for this firm as a function of labor, L.
b.   What is the necessary first-order condition for the firm to maximize profit when L > 0?
c.   Compute the profit maximizing amount of labor as a function of the wage. What is the effect of an increase in wage on the firm's optimal employment level? Use calculus to solve this.
Textbook 
Microeconomics: Theory and Applications with Calculus

Microeconomics: Theory and Applications with Calculus


Edition: 4th
Author:
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The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
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SaHiN22SaHiN22
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6 years ago
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