218 Q = Dresses per week L= Number of labor hours per week Q = L –L2/800 MCL=$20 P= $40= therefore MR=$40 Part A: A firm maximizes profit when it equates MRPL = (MR) *(MPL) = MCL MPL= dQ/dL =1 – L/400 Therefore (40)*(1-L/400) = 20. The solution is L = 200. In turn, Q = 200 – (2002/800). The solution is Q = 150. The firms profit is= PQ – (MC)L= ($40) (150) – ($20) (200) = $2,000 Part B Price increase to $50: Q = Dresses per week L= Number of labor hours per week Q = L –L2/800 MCL=$20…
Words 1315 - Pages 6