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A firm has a weekly short-run production function of Q = 400L - 10L 2 It can sell all the output it can produce at
A firm has a weekly short-run production function of
Q = 400L - 10L2
It can sell all the output it can produce at a price of $40 per unit (P = $40). It can hire all the workers it wants for $800 per week.
- If the firm currently has 10 workers and adds one more, find how much that 11th worker adds to physical output ( Q).
- How much is the additional output found in part a. worth?
- The MPL for this production function is MPL = 400 -20L. Find the profit-maximizing number of workers.
- If the price the firm gets for its output falls to $30, how many workers will they now want to hire? (Remember, fractional workers = part-time, so that is possible)
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