1. Suppose the production function of a firm is given as:Q = 5L + 10L2 – 2L³a. Find the number of labors that would yield maximum values of TP, AP, and MP?b. Base on the results on "a", provide a range of values that would reflect thethree stages of production.2. Consider the following graphical presentation as the optimal combination of afirm:CapitalIQICLaborOLConstruct a single graphical presentation indicating the following conditions:a. Price of Labor increases but capital still the same.b. Two months after, both price of inputs declines proportionately.c. Five months after, the price of capital increases while the labor still thesame.d. Expansion path.GE

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1. Suppose the production function of a firm is given as: Q = 5L + 10L² – 2L³ a. Find the number of labors that would yield maximum values of TP, AP, and

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

1. Suppose the production function of a firm is given as:
Q = 5L + 10L2 – 2L³
a. Find the number of labors that would yield maximum values of TP, AP, and

MP?
b. Base on the results on "a", provide a range of values that would reflect the
three stages of production.
2. Consider the following graphical presentation as the optimal combination of a
firm:
Capital
IQ
IC
Labor
OL
Construct a single graphical presentation indicating the following conditions:
a. Price of Labor increases but capital still the same.
b. Two months after, both price of inputs declines proportionately.
c. Five months after, the price of capital increases while the labor still the
same.
d. Expansion path.
GE

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