Question

1. A firm’s production function is F(L) = 36L1/3. Suppose that the cost per unit of labor is $4 and the price of output is $1, how many units of labor will the firm hire

Answer 1

Answer: 144.33

Step-by-step explanation:

Given data:

Cost per unit of labor = $4.

Output price =$1.

FL = 36L1/3.

Solution:

Units of labor needed by the firm

FL = 36L1/3.

Where

L = 4

Substitute L($4) into the equation.

FL = 36(4)1/3.

= 144.33

The firm would need to hire 144.33 unit of labor.