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Caf Fiend is coffee shop that sells cups of coffee in a perfectly competitive market. Currently, the market price for a cup of coffee is $2 pre cup. In the short run, the Caf Fiend's production function is given by Q= 80L-L2 where Q is output in thousands of coffee cups and L is output in thousands of workers. Also, Caf Fiend's marginal product of labor is MPL=80-8L. The market for Caf Fiend's employees is perfectly competitive, with an equilibrium wage of $80 per worker per day.

a. As a profit maximizing firm, how many workers will Caf Fiend hire?

b. As a profit maximizing firm, how much coffee will Caf Fiend make?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M972166

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