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A Firm Has the Following Short Run Total Product Curve

question 12

Essay

A firm has the following short run total product curve:
TPL = Q = 10.5L + 1.5L2 - .0625L3
where labor, L, is the only variable input and TPL is the total output produced per day. Assume the firm faces a fixed price of $16.00 per unit for its output. Also assume that only whole units of output are possible.
a. If the firm must pay a market-determined wage rate of $60.00 per day for each unit of labor hired, how much labor should it employ?
b. If the firm's daily fixed costs total $1000.00, what will be its total profit per day?


Definitions:

Test Statistic

A value calculated from sample data to evaluate a hypothesis about a population parameter.

Sample Variance

A statistical measure of the dispersion or variability within a sample dataset.

Populations

A complete set of individuals, items, or data from which a statistical sample can be drawn for a study.

Chi-square Value

A statistic used to measure how expectations compare to actual observed data, often used in hypothesis testing.

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