A firm has the following short-run productionfunction:Q = 50L+6L2 –0.5L-13where Q = Quantity of output per weekL = Labor (number of workers)a. When does the law of diminishing returns takeeffect?b. Calculate the range of values for labor overwhich Stages I, II, and III occur.C. Assume each worker is paid $10 per hour andworks a 40-hour week. How many workers shouldthe 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 impacton the firm's production? The long-run impact?

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Answered: A firm has the following short-run…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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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?