1. Thefollowingequationrepresentsthe productionfunctionfacedbyamanufacturingcompany:

Q=2L+0.5L²-0.025L³

where:

Q= outputperperiod

L= labourinput perperiod

1. Derivethemarginalproduct andaverage productfunctions.

(6)

1. Supposethattheproductissoldat$20perunitandthewagerateis$40perunit,calculatetheunitsof labour thatshouldbeemployedinordertomaximisethefirm'stotal profit.

(4)

1. Lobo Lighting Corporation currently employs 100 unskilled laborers, 80 factory technicians, 30skilledmachinists,and40skilledelectricians.Lobofeelsthatthemarginalproductofthelastunskilledlaborer is 400 lights per week, the marginal product of the last factory technician is 450 lights perweek, the marginal product of the last skilled machinist is 550 lights per week, and the marginalproduct of the last skilled electrician is 600 lights per week. Unskilled laborers earn $400 per week,factory technicians earn $500 per week, machinists earn $700 per week, and electricians earn $750per week.

1. Is Lobo using the lowest cost combination of workers to produce its targeted output? Providerelevantworkingstosupport your answer.

Whatrecommendationscanyoumaketoassist thecompanytoproduceitstargetedoutput