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1. Suppose a short-run production function is described as Q = 2L – (1/800)L2 where L...

1. Suppose a short-run production function is described as Q = 2L – (1/800)L2 where L is the number of labors used each hour. The firm’s cost of hiring (additional) labor is $20 per hour, which includes all labor costs. The finished product is sold at a constant price of $40 per unit of Q.

a. How many labor units (L) should the firm employ per hour:

b. Given your answer in a, what is the output (Q) per hour:

c. Given your answer in b, what is the resulting profit per hour assuming only labor costs?

d. Suppose that labor costs remain unchanged but that the price received per unit of output increases to $50. How many labor units (L) will the firm now employ?

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