Purchase Solution

Deriving Wages in a Competitive Economy

Not what you're looking for?

Ask Custom Question

Suppose a firm's production function is given by Q=12L-L^2 for L=0 to 6, where L is labour input per day and Q is output per day. Derive and draw the firm's demand for labour curve if the output sells for $10 in the competitive market. How many workers will the firm hire when the wage rate is $30 per day? $60 per day? (Hint: the marginal product of labour MPL is 12-2L).

Purchase this Solution

Solution Summary

Given a production function how do you determine the wage in a given competitive economy? This solution provides an answer to this question using a typical quadratic production function.

Solution Preview

The firm's production function is given to be Q = 12L - L^2. Differentiating this with respect to L gives us the marginal product of labor that is MPL = 12 - 2L.

Labor ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.