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. Please show the expression for 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?
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. Please show the expression for 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?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- 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. Please show the expression for 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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