1.1. Suppose that the wage rate is $16 per hour and the price of the product is $2. Values for output and labor are in units per hour.

a. Find the profit-maximizing quantity of labor.

b. Suppose that the price of the product remains at $2 but that the wage rate increases to $21. Find the new profit-maximizing level of L.

c. Suppose that the price of the product increases to $3 and the wage remains at $16 per hour. Find the new profit-maximizing L.

d. Suppose that the price of the product remains at $2 and the wage at $16, but that there is a technological breakthrough that increases output by 25 percent for any given level of labor. Find the new profit-maximizing L.

Transcribed Image Text:

q L 0 20 35 - 2 0 1 47 3 57 65 5 70 6