Suppose you are an efficiency expert which is hired by a manufacturing firm that uses the K and E as inputs. The production function for a aggressive firm is Q = K1/2 E1/2. The firm sells its output at a price of $32, and can hire labor at a wage of $12.44 per hour. In the short run, capital is fixed at 49 units.
1. Determine the short run production function?
2. Calculate the Marginal Product of Labor.
3. Calculate the Value of the Marginal Product of Labor
4. Calculate the Marginal Cost of producing one more unit of output.
5. Calculate the profit-maximizing quantity of labor?
6. Calculate the profit-maximizing output level?
7. Graph your results labeling as many points as you can
8. Determine the maximum price of capital at which the firm will still make nonnegative profits?