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Question

<div class="txt-body question-body"><div class="feedback-rating abuse-flag" data-questionid="12254419"></div><div class="ugc-base"><p>Firm uses 15 units of k, price of k=400 per unit</p><p>price of good=100: wage per worker =40,000</p><p>L Q</p><p>1 800</p><p>2 1900</p><p>3 2700</p><p>4 3350</p><p>5 3775</p><p>6 4100</p><p>A. does this represents the SR OR LR? Explain</p><p>b. what is the optimal number of workers this firm willhire?</p><p>c. what are profits at this number of workers?</p><p>d. is the underlying total cost curve for this firm quadratic orcubic? explain?</p></div></div>

Explanation / Answer

&lt;div class=&quot;txt-body answer-body&quot;&gt; &lt;div class=&quot;answer-given-body ugc-base&quot;&gt; &lt;p&gt;A. It represents the short run because the capital is not avariable here, it is fixed at 15 units. So it cann't be along runas in long run all inputs can change.&lt;/p&gt;&lt;p&gt;B. Optimal number of workers will be where&lt;/p&gt;&lt;p&gt;W =P*MPL&lt;/p&gt;&lt;p&gt;40,000 = 100*MPL&lt;/p&gt;&lt;p&gt;MPL = 400&lt;/p&gt;&lt;p&gt;So , L = 5&lt;/p&gt;&lt;p&gt;c. Profits = Total Revenue - Total Cost = P*Q - W*L - R*K&lt;/p&gt;&lt;p&gt;= 100*3775 - 40,000*5 - 400*15&lt;/p&gt;&lt;p&gt;= 171,500&lt;/p&gt;&lt;p&gt;d. As MPL = dTC/dL is just decreasing only and is not changingthe sign or curvature , thus TC is a quadratic function.&lt;/p&gt;&lt;p&gt;If you don't understand anything , then comment , I will revertback on the same. :)&lt;/p&gt; &lt;/div&gt; &lt;/div&gt;

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