A short run production function of a competitive firm is given by Y=6L^(2/3) where Y represents the units of output while L is the labour required. If P = 3 and W = 6. How many units of L will the firm hire?

A short run production function of a competitive firm is given by Y=6L^(2/3) where Y represents the units of output while L is the labour required. If P = 3 and W = 6. How many units of L will the firm hire?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 5E

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

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