Question
A firm has the following short run total product curve: TP L = Q = 10.5L + 1.5L 2 - .0625L 3 , where labor,
A firm has the following short run total product curve:
TPL = Q = 10.5L + 1.5L2 - .0625L3,
where labor, L, is the only variable input and TPL is the total output produced per day. Assume the firm faces a fixed price of $16.00 per unit for its output. Also assume that only whole units of output are possible.
| a. | If the firm must pay a market-determined wage rate of $60.00 per day for each unit of labor hired, how much labor should it employ?
|
| b. | If the firm's daily fixed costs total $1000.00, what will be its total profit per day? |
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Derivative Products And Pricing The Das Swaps And Financial Derivatives Library
Authors: Satyajit Das
1st Edition
0470821647, 9780470821640
