Optimal labor allocation in the short run requires that marginal revenue product equal the marginal

cost of the variable input. When labor is the variable factor, optimal allocation => MP =

Suppose that a firm produces output that can be sold at $1200, using the following production function

= 1/21/2 (therefore, the marginal product of labor P = 1

2 1/21/2). Assuming that capital is

fixed at 1 unit in the short run, how many labor units should the firm employ to maximize profits if the

wage rate is $200?