Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 6

Consider the following short-run production function (where L = variable input,Q = output):Q = 10L 0.5L2
Suppose that output can be sold for $10 per unit. Also assume that the firm can obtain as much of the variable input (L) as it needs at $20 per unit.
a. Determine the marginal revenue product function.
b. Determine the marginal factor cost function.
c. Determine the optimal value of L, given that the objective is to maximizeprofits