In Problem 1, the Production Function Is Given by F(L)

question 4

Multiple Choice

In Problem 1, the production function is given by F(L) . Suppose that the cost per unit of labor is $8 and the price of output is 4, how many units of labor will the firm hire?

• A) 16
• B) 8
• C) 4
• D) 24
• E) None of the above.

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Definitions:

Price

The financial contribution expected, compelled, or made in payment for something.

Tariff

A tax imposed by a government on goods and services imported from other countries, used to control trade volumes.

Decrease in Supply

This occurs when there is a reduction in the quantity of a good or service that producers are willing and able to supply at all possible prices.

Increase in Price

A situation where the cost of a product or service rises over a period of time.