Refer to the information provided in Figure 10.3 below to answer the questions that follow. Figure 10.3
-Refer to Figure 10.3. If labor supply is given by S0 and the firm is using K1 units of capital, this firm should hire ________ units of labor to maximize profit.
A) I0
B) I1
C) I2
D) I3

Question

Refer to the information provided in Figure 10.3 below to answer the questions that follow.  Figure 10.3
-Refer to Figure 10.3. If labor supply is given by S0 and the firm is using K1 units of capital, this firm should hire ________ units of labor to maximize profit.
A) I0 
B) I1 
C) I2 
D) I3

Quizplus · Accepted Answer

To maximize profit, the firm should hire labor where the marginal product of labor equals the wage rate. If labor supply is given by S0 and the firm is using K1 units of capital, the optimal labor quantity is I0.

Refer to the Information Provided in Figure 10