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 Post subject: maximize profits. Plz helpPosted: Mon, 5 Apr 2010 16:16:01 UTC

Joined: Tue, 9 Feb 2010 23:36:02 UTC
Posts: 7
[u][b]PLEASE ANY HELP WITH THIS QUESTION WILL B MUCH APPRECIATED[/b][/u]
The compensation firms pay workers typically includes benefits as well as salary.
The cost of one particular benefit, health insurance, has been rising rapidly.
Consider a firm that uses only labor as its input and has the production function

f(L)=(alpha)L^Beta
Where L is the number of workers employed, alpha>0, and 1>beta>0. The profits of this firm, II, equal
II=p x f(L) - (w+b)L,
where p is the price of the firm's product, w is the wage paid to a worker, and b is the cost of providing a worker with benefits.
Find the number of workers the firm will demand in order to maximize
its profits. Assume that the firm takes as given p,w, and b. How does the
optimal number of workers demanded vary with the value of b?

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 Post subject: Re: maximize profits. Plz helpPosted: Mon, 5 Apr 2010 18:10:03 UTC
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Joined: Sun, 24 Jul 2005 20:12:39 UTC
Posts: 3688
Location: Ottawa Ontario
007grl wrote:
PLEASE ANY HELP WITH THIS QUESTION WILL B MUCH APPRECIATED

What variable does "B" represent?

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