1. A firm calculates that the marginal product of labor (MPL) can be found from the following equation:

MPL=35-2L

whereLis the number of workers hired.

The production function for this firm is as follows:

Q=35L-L²

The firm knows it can find profits with the following equation:

Profit=PQ-WL

wherePstands for the selling price of the good,Qstands for total output, andWrepresents the wage. Price is equal to $1.

• a. If the wage is $11, how many workers will the firm hire? How much profit will it earn?
• b. Compare this level of profits to those earned by the firm if it hired one fewer worker thanL* and one worker more thanL* to demonstrate thatL* workers generate the most profit for the firm.