Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A perfectly competitive firm operates in the short-run with labor as its only variable factor. Its production function is: Q = -L3 + 10L2

A perfectly competitive firm operates in the short-run with labor as its only variable factor. Its production function is:
    Q = -L3 + 10L2 + 88L
where Q is output per week measured in tons and L is the number of workers employed. The weekly wage is $324 and the product sells for $3.24 per ton.
   (a) At what weekly output is marginal cost equal to average variable cost?
   (b) What is the minimum product price at which the firm will operate in the short-run?
   (c) How many workers should the firm employ to maximize profits?
   (d) Calculate the firm's point elasticity of demand for labor at the equilibrium in (c) above.

Step by Step Solution

3.44 Rating (160 Votes )

There are 3 Steps involved in it

Step: 1

To solve the questions we need to understand the concepts of marginal cost MC average variable cost ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics An Intuitive Approach with Calculus

Authors: Thomas Nechyba

1st edition

538453257, 978-0538453257

More Books

Students also viewed these Economics questions

Question

What is the value of lean manufacturing?

Answered: 1 week ago