Marginal Product Theory
a. What is the MC of output in the short-run?
b. What is the MC of labor (employed)?
c. What is the short-run profit-maximizing decision with regard to Q? ...with regard to E?
d. What is the 'marginal benefit of a worker' to the firm, and what is its relation to the 'marginal benefit of output' to firms?
e. Why does the short-run demand curve have a tilt on the lower end of it? Specifically, why does the price of output change?
f. What is the long-run profit-maximizing condition for the demand of inputs (labor and capital)?
2. Question on a Specific Production Function
A firm has the following production function Q(E,K):
a. If the firm is maximizing profit in a competitive market for output and inputs, then what are the price of labor (w) and capital (r) at input combination (E,K) = (4.3, 6.41) and a total cost (TC) of $38.58?
b. What is the total output of production in (a)?