Question

suppose a firms output is given by the funcation q=12L-L^2 where L is labor. the firm...

suppose a firms output is given by the funcation q=12L-L^2 where L is labor. the firm sells its output for 10 in the competitive market find

(a) MPL

(b) write the expression for the firms demand for labor

(c) what is the optimal number of workers the firm will hire if the wages are 60

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Answer #1

Answer
(a) MPL
It is change in output and found by differentiation of production function
MPL=dq/dL=12-2L
MPL=12-2L

(b) write the expression for the firm's demand for labor
an expression for demand is
MRPL=MPL* price of the output
MRPL=(12-2L)*10=120-20L
so the demand curve is
wage=120-20L

(c) what is the optimal number of workers the firm will hire if the wages are 60
using the wage in the demand curve
60=120-20L
20L=60
L=3
the optimum number of workers is 3.

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