1. a. Johnson, a sole proprietor, produces a new product, zips, using one fixed input, capital (K), and one variable input, labor (L). Currently zips are sold in a perfectly competitive market at a price of $1 each. While John- son is a whiz at producing zips, he is poor at profit calculations and isn't sure how much labor he should hire during the current period to max- imize short-run profits. Can you help him out? The relationship between the inputs of labor and capital that Johnson uses and the output he gets is depicted by the isoquant map in Figure 13-1. Johnson's current stock of capital totals four units and costs $500 per period. The price of labor is $1,500 per worker. To maximize short-run profits, how much labor should Johnson hire? What level of output should he produce? What profits will he earn? [Hint: Start by filling in columns 2 through 11 in Table 13-1. ] FIGURE 13-1 K The Production Function for Zips 6 5 K = 4 :3, 510 3 13610 2 9500 6000 1 100U we have called this frie value on the TABLE 13-1 Cost and Revenue Data for Zip Production Total everde Graduet VMPL VC Profi for (ARPL) MP L (p . MP () W ( w . [ ) FC (8 ) TC TR (p . APL) ( 2 ) (3 ) ( 4 ) (5) ( 6 ) (7) (9 ) (10) (11) (12) (1) 10 0 0 Page 2 n 4