A firm faces competitive markets for its inputs and its output.At the profit-maximizing level of output,its marginal cost is $10 and the wage paid is $2.If the MPL = L^-0.5,how many workers will be hired by the firm? A) 35 B) 40 C) 25 D) 5

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Quizplus · Accepted Answer

The firm will hire workers until the marginal product of labor (MPL) times the price of output equals the wage. Given MPL = L^-0.5 and wage = $2, solve for L when MPL * $10 = $2. This gives L = 25.

A Firm Faces Competitive Markets for Its Inputs and Its