Q. Johnny works for the Great Big Cookie Company (GBC) which buys labor at a wage of $1 an hour, and uses it to produce cookies, which it sells at $p each. GBC has a production function:
C = 2L^(1⁄2) where L is labor input
a) Write down an expression for the profit GBC will make if it uses L units of labor at $1 an hour and sells the resulting output of cookies at $p a cookie. This expression should be in terms of p and L.
b) Maximize GBC's profit to find its demand for labor, Ld, in terms of p.
c) Find its supply of cookies, Cs, also in terms of p.