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corie corie
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5 years ago
Currently, Ronald's Outboard Motor Manufacturing uses 100 power drills in the production of motors (K represents the number of power drills).  Ronald's marginal product of labor function is MPL (L, K) =  .  Ronald can sell all the motors he produces for $100 per unit and hire all the labor units he desire at $10 per unit.  What happens to Ronald's optimal labor employment if he decreases the number of power drills to 90?
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Microeconomics

Microeconomics


Edition: 8th
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CanihCanih
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5 years ago
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Ronald's marginal revenue of the product of labor is: MRPL (L, K) =  MPL (L, K)  MR =  .     With 100 power drills, the optimal employment of labor is:  MRPL =   =   = 10  L = 1,000,000.  If the number of power drills decreases to 90, the optimal employment of labor is:  MRPL =   =   = 10  L = 810,000.  Thus, decreasing the number of power drills from 100 to 90 decreases the optimal employment of labor by 19%.
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corie Author
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5 years ago
Good timing, thanks!
Ifekwunigwe
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Yesterday
Correct Slight Smile TY
prime7105
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2 hours ago
Thanks
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