Question
A firm can manufacture a product according to the production function Q = 2(K) 1/2 (L) 1/2 where K represents capital equipment and L is
A firm can manufacture a product according to the production function Q = 2(K)1/2(L)1/2 where K represents capital equipment and L is labor. The company has already spent $10,000 on the 4 units capital.
a. Calculate the average product of labor, APL and the marginal product of labor, MPL.
b. If workers at the firm are paid a competitive wage of $100 and the product is sold for $200 each, what is optimal level of labor usage and what is the maximum profit?
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Economics Today
Authors: Roger LeRoy Miller
16th edition
132554615, 978-0132554619
