Answer to Question #315331 in Microeconomics for lydia

Question

Suppose a firm employs labor as its only variable input. All workers are paid $200 per day. Output per day and variable cost are shown below.

q 1 2 3 4 5 6 7 8

VC 200 400 600 800 1200 1600 2400 3200

L 1 2 3 4 6 8 12 16

Required:

a)Find each unit of output (Q) calculate the units of labour (L) needed to produce the corresponding output level.

b)If the inverse demand for highlighter is p = 60 - Q. At a price of $20, what is the consumer surplus?

Answer 1

Since labor is the only variable input.It is right to say the business operates in the short run.