A firm uses 1 capital for every 5 workers to produce 1 output. The price of output is $75, the wage rate is $8, and the rental rate for capital is $2 per unit. Assume capital is not a fixed cost.
a. What is the profit maximizing level of labor demand if K=5?
b. What is the short-run quantity produced?
c. What is the profit maximizing level of labor demand if Q=50?
d. What is the long-run quantity produced? Don’t assume Q=50.