Firm has estimated that the marginal product of labor

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In the short run, labor is the only variable factor used by a firm in the production of a certain product. The manager of the firm has estimated that the marginal product of labor is given by MPL = 160/√L. The wage per unit of labor is w = $4, and each unit of output can be sold at a constant price P. The firm is maximizing profits by employing L = 100. Based on this information. (Note: the symbol √ represents the square root).

the price of each unit of output is P = $1.5.

the firm will increase L if w increases

the law of diminishing returns does not hold

none of the above.

Reference no: EM131092881

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