How many units of labor does the firm need to produce 80


The firm Avanti produces custom-made sports cars that appeal to a certain clientele because of their high price and thus exclusivity. Avanti has the following production function: q = f(k, l) = 4k 2/3 l 1/3 , where k and l are the capital and labor input respectively. (a) What additional output does one additional (small) unit of capital produce when the capitallabor ratio is (k/l) = 8? (2) (b) If you employed twelve workers less (again, small units), how many additional units of capital would you need to produce the same output? Assume that the capital-labor ratio is (k/l) = 8. [Do not assume this any further.] (2) (c) How many units of labor does the firm need to produce 80 units of output in the short run when the capital stock is fixed at a level of k = 5?

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Business Economics: How many units of labor does the firm need to produce 80
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