A firm can manufacture a product according to the production function Q = F(K, L) = K0.5L0.5. (a) What is the average product of labor, APL, when the level of capital is fixed at 36 units and the firm uses 16 units of labor? (b) What is the marginal product of labor, MPL, when capital is fixed at 36 units? (c) Suppose capital is fixed at 36 units. If the firm can sell its output at a price of $100 per unit of output and can hire labor at $40 per unit of labor, how many units of labor should the firm hire in order to maximize profits?
A firm can manufacture a product according to the production function Q = F(K, L) = K0.5L0.5.
(a) What is the average product of labor, APL, when the level of capital is fixed at 36 units and the firm uses 16 units of labor?
(b) What is the marginal product of labor, MPL, when capital is fixed at 36 units?
(c) Suppose capital is fixed at 36 units. If the firm can sell its output at a price of $100 per unit of output and can hire labor at $40 per unit of labor, how many units of labor should the firm hire in order to maximize profits?
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