Your given the firm production function Y= L^0.5 , were Y is quantity of output, L number of labour.
a) find production demand fuction for labour, show your working clearly
b) If the wage rate is $10, what is the optimal level of labour?
a) Production demand function for labour:
Y = L^0.5
L = Y^2
Therefore, the production demand function for labour is L = Y^2.
b) If the wage rate is $10, the optimal level of labour is given by the equation:
Wage rate = 10 = L^0.5
L = 100
Therefore, the optimal level of labour is 100.