Suppose a short-run production function is described as Q = 2L - (1/800)L2 where L is the number of labors used each hour. The firm's cost of hiring (additional) labor is $20 per hour, which includes all labor costs. The finished product is sold at a constant price of $40 per unit of Q
How many labor units (L) should the firm employ per hour:
Given your answer in a, what is the output (Q) per hour:
Suppose instead that the price of the product is unchanged at $40, but that the cost of hiring labor increases to $24 per hour. How many labor units (L) will the firm employ?
Suppose that labor costs remain unchanged but that the price received per unit of output increases to $50. How many labor units (L) will the firm now employ?
In terms of the demand (curve) for labor, how would we visually see (what is the difference between) the changes in parts d and e?
Suppose that management increases the size of its plant, providing each worker with additional capital. What is the most likely impact on the marginal products of its labor input.