A Competitive Firm Has a Production Function Described as Follows

question 9

Essay

A competitive firm has a production function described as follows."Weekly output is the square root of the minimum of the number of units of capital and the number of units of labor employed per week." Suppose that in the short run this firm must use 16 units of capital but can vary its amount of labor freely.
a.Write down a formula that describes the marginal product of labor in the short run as a function of the amount of labor used.(Be careful at the boundaries.)
b.If the wage is w = $1 and the price of output is p = $4, how much labor will the firm demand in the short run?
c.What if w = $1 and p = $10?
d.Write down an equation for the firm's short-run demand for labor as a function of w and p.

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Definitions:

Planned Carefully

The process of organizing activities or projects with thorough consideration and attention to detail to ensure successful outcomes.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale.

Labor Markets

Economic sectors that deal with the demand and supply of labor, determining employment levels and wage rates.

Legal Institutions

are established organizations within a society that develop, enforce, and interpret laws governing the behavior of individuals and groups.