A Firm Calculates That the Marginal Product of Labor (MPL)can

question 83

Essay

A firm calculates that the marginal product of labor (MPL)can be found from the following equation:
MPL = 35 - 2L
where L is the number of workers hired.
The production function for this firm is as follows:
Q = 35L - L²
The firm knows it can find profits with the following equation:
Profit = P * Q - W * L
where P stands for the selling price of the good,Q stands for total output,and W represents the wage.Price is equal to $1.
a.If the wage is $11,how many workers will the firm hire? How much profit will it earn?
b.Compare this level of profits to those earned by the firm if it hired one fewer worker than L* and one worker more than L* to demonstrate that L* workers generate the most profit for the firm.

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Definitions:

Homeostasis

The ability or tendency of an organism or cell to maintain internal equilibrium by adjusting its physiological processes.

Thoracic Cavity

The part of the body located between the neck and the abdomen, housing the lungs and heart among other organs.

Esophagus

The muscular tube that conveys food from the mouth to the stomach.

Trachea

The windpipe, a vital part of the respiratory system that provides air passage from the larynx to the bronchi of the lungs.