Suppose the production function for widgets is given by q=KL+6L²-0.1L³ where q represents the annual quantity of widgets produced, K represents annual capital input and L represents annual labor input. A) Suppose K=10. At what level of labor input does average product of labor reach a maxiumum? How many widgets are produced at that point? B) Again assuming that K=10, at what level of labor input does MPL=0? C)Determine and show whether the production process exhibits law of diminishing returns.
Suppose the production function for widgets is given by q=KL+6L²-0.1L³ where q represents the annual quantity of widgets produced, K represents annual capital input and L represents annual labor input. A) Suppose K=10. At what level of labor input does average product of labor reach a maxiumum? How many widgets are produced at that point? B) Again assuming that K=10, at what level of labor input does MPL=0? C)Determine and show whether the production process exhibits law of diminishing returns.
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.2P
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Suppose the production function for widgets is given by
q=KL+6L²-0.1L³
where q represents the annual quantity of widgets produced, K represents annual capital input and L represents annual labor input.
A) Suppose K=10. At what level of labor input does average product of labor reach a maxiumum? How many widgets are produced at that point?
B) Again assuming that K=10, at what level of labor input does MPL=0?
C)Determine and show whether the production process exhibits law of diminishing returns.
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