Answer to Question #49858 in Microeconomics for Alexandria
A. Determine marginal revenue product function
B. determine marginal factor cost function
C. Determine the optimal value of L, given the objective is to maximize profits
A. Marginal revenue product function is:
MRP = MR*MP = 10*Q' = 100 - 10L
B. Marginal factor cost function MC = Q' = 10 - L
C. The optimal value of L, given the objective is to maximize profits, is when MRP = 0, so 100 - 10L = 0, L = 10, so 10 workers should be hired to maximize profits.
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