A firm has the following short-run production function: Q = 50L+6L2 -0.5L3 where Q = Quantity of output per week L = Labor (number of workers) a. When does the law of diminishing returns take effect?
A firm has the following short-run production function: Q = 50L+6L2 -0.5L3 where Q = Quantity of output per week L = Labor (number of workers) a. When does the law of diminishing returns take effect?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A firm has the following short-run production
function:
Q = 50L+6L2 –0.5L-
13
where Q = Quantity of output per week
L = Labor (number of workers)
a. When does the law of diminishing returns take
effect?
b. Calculate the range of values for labor over
which Stages I, II, and III occur.
C. Assume each worker is paid $10 per hour and
works a 40-hour week. How many workers should
the firm hire if the price of the output is $10?
Suppose the price of the output falls to $7.50.
What do you think would be the short-run impact
on the firm's production? The long-run impact?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F62273c70-b248-4b75-84ee-5ee5c83ce6ef%2F48e2bcec-63bc-4d8e-af1c-3e60c9e8bbd3%2F4qtpbah_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A firm has the following short-run production
function:
Q = 50L+6L2 –0.5L-
13
where Q = Quantity of output per week
L = Labor (number of workers)
a. When does the law of diminishing returns take
effect?
b. Calculate the range of values for labor over
which Stages I, II, and III occur.
C. Assume each worker is paid $10 per hour and
works a 40-hour week. How many workers should
the firm hire if the price of the output is $10?
Suppose the price of the output falls to $7.50.
What do you think would be the short-run impact
on the firm's production? The long-run impact?
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