Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume a firm has the following production function with inputs labor (L) and capital (K): q=1/2L^1/2K Assume that, in the short-run, the firm's capital is

Assume a firm has the following production function with inputs labor (L) and capital (K):

q=1/2L^1/2K

Assume that, in the short-run, the firm's capital is fixed at two units,K=2. In addition, assume that the firm must pay a wage of $2 (w=2) for each unit of labor that they hire in the short-run. If the firm's profit-maximizing level of output in the short-run isq=4, what must be the price (p) that they can charge for each unit of output they produce?

p= ? dollars

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Organic Chemistry

Authors: Marc Loudon, Jim Parise

6th Edition

1936221349, 978-1936221349

Students also viewed these Economics questions