Question In the short run, a particular type of skilled labor is the only variable factor used by a firm. The manager of the firm has estimated that the marginal product of labor is given by MPL = a – b L, where a and b are numbers to be specified below. The hourly wage is w, and each unit of output can be sold in a competitive market at a market price P. If w = $78, P = $25, a = 50, b = 2, and the firm is employing L = 22, then based on this information The firm is using the optimal (profit-maximizing) amount of labor The firm can increase its profits by reducing the amount of labor used The firm can increase its profits by increasing the amount of labor used The law of diminishing returns does not hold
Question
In the short run, a particular type of skilled labor is the only variable factor used by a firm. The manager of
the firm has estimated that the marginal product of labor is given by MPL = a – b L, where a and b are numbers to be specified below. The hourly wage is w, and each unit of output can be sold in a competitive market at a market price P. If w = $78, P = $25, a = 50, b = 2, and the firm is employing L = 22, then based on this information<table><tbody><tr><td> The firm is using the optimal (profit-maximizing) amount of labor </td> </tr><tr><td> The firm can increase its profits by reducing the amount of labor used </td> </tr><tr><td> The firm can increase its profits by increasing the amount of labor used </td> </tr><tr><td> The law of diminishing returns does not hold</td> </tr></tbody></table>
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
