A Firm That Only Employs Labor (L)has the Following Production

question 79

Essay

A firm that only employs labor (L)has the following production function:
f(L)= 20L - L²
Let the price of output be normalized to one and the price of labor (relative to output price)is w.
a.Write out the profit function for this firm as a function of labor,L.
b.What is the necessary first-order condition for the firm to maximize profit when L > 0?
c.Compute the profit maximizing amount of labor as a function of the wage.What is the effect of an increase in wage on the firm's optimal employment level? Use calculus to solve this.

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Definitions:

Sexual Maturation

The process of physical and hormonal changes that lead to reaching reproductive capability and developing secondary sexual characteristics.

Puberty

The developmental stage in humans marking the transition from childhood to adulthood, characterized by physical growth and sexual maturation.

Formal Operational

The final stage of cognitive development in Piaget's theory, occurring from age 12 onwards, characterized by the ability to think abstractly and logically.

Hypothetical Situations

Scenarios or conditions that are imagined for the purpose of discussion, analysis, or experimentation, often used in problem-solving or decision-making processes.