Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the production function for running shoes is given by Q=2sqrt{K}sqrt{L} Q =2 K L , where Q Q represents the quantity of running shoe

Suppose the production function for running shoes is given by Q=2\sqrt{K}\sqrt{L}Q=2KL, where QQ represents the quantity of running shoe pairs produced per day, KK represents daily capital input, and LL represents daily labor input. This implies that the marginal product of labor is given by MP_L=\frac{\sqrt{K}}{\sqrt{L}}MPL=LK. Suppose further that running shoes sell for $100 per pair and that workers are paid $200 per hour.

If in the short run capital is fixed at 100 units, then the firm's current workforce of 20 workers is either to large or to small?

.In fact, the firm should hire how many workers total to maximize their profits?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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_2

Step: 3

blur-text-image_3

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

The Chinese Economy Transitions And Growth

Authors: Barry Naughton

1st Edition

0262640643, 9780262640640

More Books

Students also viewed these Economics questions

Question

Describe three active strategies involving common stocks.

Answered: 1 week ago

Question

Discuss Ms. Lincolns level of commitment to occupational safety.

Answered: 1 week ago