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1. (SH, Exercise 8.3.1) A firm has production function Y (L) = 5L1/2 , where L ≥ 0 is labour input and Y is output. The price per unit of output is $20. The price of unit of labour (wage) is $w, where w is a parameter. There is a minimal wage $5, thus w ≥ 5.
(a) The firm maximises profit. Find the amount of labour L(w) that the
firm employs, as a function of parameter w.
(a) The firm maximises profit. Find the amount of labour L(w) that the
firm employs, as a function of parameter w.