Estimation of Short Run Production Function
6 Pages Posted: 5 Aug 2011
Date Written: May 30, 2011
The purpose of this study is to find out the labor units at which firm earns the maximum profit to minimize the costs of input. We use the secondary and time series data of 29 quarters and estimated the results with help of multiple regression analysis to find out that at optimal level where marginal revenue product of labor intersect the marginal resource cost of labor. We have concluded that optimum units of labor units should be 1034. By employing 1034 units of labor, firm can generate maximum profit.
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