Suppose that a firm's production function is given by Q = KL. If capital is fixed at 1 unit in the short run, how much labor should the firm employ to maximize profits if the wage rate is $2? Assume that the price of product the firm sells is $10.

Suppose that a firm's production function is given by Q = KL. If capital is fixed at 1 unit in the short run, how much labor should the firm employ to maximize profits if the wage rate is $2? Assume that the price of product the firm sells is $10.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that a firm's production function is given by Q = KL. If capital is fixed at 1 unit in the short run, how much
labor should the firm employ to maximize profits if the wage rate is $2? Assume that the price of product the firm
sells is $10.
Multiple Choice
O Labor = 25.
O Labor = 10.
Labor = 30.
O Labor = 20.

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