Explore BrainMass

Explore BrainMass

    Determine the quantity of labor

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A firm has a technology described by the production function:

    q = 2.5 L1/4K1/2

    where L is the number of labor units per period and K is the number of square feet of floor space and machines per period, and q represents firm output. The firm faces the following output and input prices on the market, and these are fixed to this firm:

    Output price: $100.0/unit
    Wage rate: $25.00/labor unit
    Capital cost/unit: $2.50/sq. ft.

    1. In the short run this firm has 160,000 square feet of floor space, all of which is to be used for production. Determine the quantity of labor demanded by the firm, the K/L ratio, output produced and profit to the firm.

    © BrainMass Inc. brainmass.com February 24, 2021, 2:30 pm ad1c9bdddf
    https://brainmass.com/economics/output-and-costs/determine-the-quantity-of-labor-25628

    Solution Preview

    In the short run K=160,000,
    then q = 2.5L^(1/4)*( 160,000) ^(1/2) = 2.5L^(1/4)*400 = 1000 L^(1/4)
    the firm's profit function is ...

    Solution Summary

    In the short run this firm has 160,000 square feet of floor space, all of which is to be used for production. Determine the quantity of labor demanded by the firm, the K/L ratio, output produced and profit to the firm.

    $2.19

    ADVERTISEMENT