Suppose that a firm has the following production function Q(K,L) = AKL² – BL³ where K represents capital level and L represents labor level. Assume that the company has 1200 units of capital, i.e. K=3000, and the manager of the company, hires you as an economist. Your tasks are listed below. a) Derive the firm's total product of labor (TPL), marginal product of labor (MPL) and average product of labor (APL). b) Calculate the labor levels at which MPµ and APı are maximized, respectively. c) Calculate the amount of labor at which APL MPL. Graph the MPL and APL on the same diagram. %3D
Suppose that a firm has the following production function Q(K,L) = AKL² – BL³ where K represents capital level and L represents labor level. Assume that the company has 1200 units of capital, i.e. K=3000, and the manager of the company, hires you as an economist. Your tasks are listed below. a) Derive the firm's total product of labor (TPL), marginal product of labor (MPL) and average product of labor (APL). b) Calculate the labor levels at which MPµ and APı are maximized, respectively. c) Calculate the amount of labor at which APL MPL. Graph the MPL and APL on the same diagram. %3D
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter7: Production Economics
Section: Chapter Questions
Problem 7E
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Transcribed Image Text:Suppose that a firm has the following production function
Q(K,L) = AKL² – BL³
where K represents capital level and L represents labor level.
Assume that the company has 1200 units of capital, i.e. K=3000, and the manager of the company, hires you as
an economist. Your tasks are listed below.
a) Derive the firm's total product of labor (TPL), marginal product of labor (MPL) and average product of labor
(APL).
b) Calculate the labor levels at which MPL and APı are maximized, respectively.
c) Calculate the amount of labor at which APL = MPL. Graph the MPL and APL on the same diagram.
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