A firm has the following short run total product curve:

where labor, L, is the only variable input and TP_L is the total output produced per day.
a. If the firm is operating in the short run with K fixed at K = 5, the average price for a unit of its output is $5.00, and average raw materials cost per unit is $3.00, what is the equation for the marginal revenue product of input L?
b. If the firm must pay a market-determined wage rate of $90.00 per day for each unit of labor hired, how much labor should it employ?
c. How many units of output will be produced per day? Fractional units are not permitted - round UP to the next whole unit.)
d. If the firm's daily fixed costs total $118.00, what will be its total profit per day?

Question

A firm has the following short run total product curve:

where labor, L, is the only variable input and TP_L is the total output produced per day.
a. If the firm is operating in the short run with K fixed at K = 5, the average price for a unit of its output is $5.00, and average raw materials cost per unit is $3.00, what is the equation for the marginal revenue product of input L?
b. If the firm must pay a market-determined wage rate of $90.00 per day for each unit of labor hired, how much labor should it employ?
c. How many units of output will be produced per day? Fractional units are not permitted - round UP to the next whole unit.)
d. If the firm's daily fixed costs total $118.00, what will be its total profit per day?

Quizplus · Accepted Answer

The Answer of A firm has the following short run total product curve: where labor, L, is the only variable input and TP_L is the total output produced per day. a. If the firm is operating in the short run with K fixed at K = 5, the average price for a unit of its output is $5.00, and average raw materials cost per unit is $3.00, what is the equation for the marginal revenue product of input L? b. If the firm must pay a market-determined wage rate of $90.00 per day for each unit of labor hired, how much labor should it employ? c. How many units of output will be produced per day? Fractional units are not permitted - round UP to the next whole unit.) d. If the firm's daily fixed costs total $118.00, what will be its total profit per day?

A Firm Has the Following Short Run Total Product Curve