Question

An apple farmer produces apples, while using the labor she hires as the input. Apples sell for $2 per apple, while it costs the farmer $10 to hire one unit of labor. Calculate the number of units of labor (units of the input), on the isoprofit line where profit equals to $60 and the number of apples (units of output) equals to 70.

Answer 1

It is given that the profit equals $60 , and profit equals total revenue minus total cost. Here , total revenue equals $140 (70 units of apples sold times price per apple of $2). Total cost is the amount spent on producing apples which is the number of labors hired times the labor wages ($10)

Therefore ,

Profit = total revenue - total cost

$60 = $140 - ( number of labors hired x $10)

Number of labors hired x $10 = $140 - $60

Number of labors hired = $80/$10 = 8

Therefore , 8 labors are hired.