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A pizzeria hires labor (L ) and rents capital (K ) to produce pepperoni pizzas (q ). Pizzas sell forp = $ 10 each. Labor

A pizzeria hires labor (L

) and rents capital (K

) to produce pepperoni pizzas (q

). Pizzas sell forp

=

$

10

each. Labor is hired at a rate ofw

=

$

25

. Capital is rented at a rate ofr

=

$

100

. Consider the short run where capital is fixed atK

=

1

. The production function is:

q

=

10

K

L

The marginal product of labor is:

M

P

L

=

5

K

L

In the short-run, how much labor should the pizzeria hire to maximize profits?

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