The firm, Apple, uses a single input, labor (L), to make stylus pens for their iPads...

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The firm, Apple, uses a single input, labor (L), to make stylus pens for their iPads using the production function, f (L) = 8

business economics

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Answer 1

Answer #1

Production function is Q = 8L^0.5

Price of product = $20

Labor cost / wage rate = $10

Marginal product of labor = dQ/dL = 4L^-0.5

Now at the profit maximizing choice of labor we have P * MPL = W

20*4L^-0.5 = 10

80/10 = L^0.5

L = 64

Hence, the optimum number of labor units is 64.

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Answer 2

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