Average of marginal production Economists use productionfunctions to describe how the output of a system varies with respect to another variable such as labor or capital. For example, theproduction function P(L) = 200L + 10L2 - L3gives the outputof a system as a function of the number of laborers L. The average product A(L) is the average output per laborer when L laborers are working; that is, A(L) = P(L)/L. The marginal productM(L) is the approximate change in output when one additionallaborer is added to L laborers; that is, M(L) = dP/dL.a. For the given production function, compute and graph P, A, and L.b. Suppose the peak of the average product curve occurs atL = L0, so that A′(L0) = 0. Show that for a general production function, M(L0) = A(L0).
Minimization
In mathematics, traditional optimization problems are typically expressed in terms of minimization. When we talk about minimizing or maximizing a function, we refer to the maximum and minimum possible values of that function. This can be expressed in terms of global or local range. The definition of minimization in the thesaurus is the process of reducing something to a small amount, value, or position. Minimization (noun) is an instance of belittling or disparagement.
Maxima and Minima
The extreme points of a function are the maximum and the minimum points of the function. A maximum is attained when the function takes the maximum value and a minimum is attained when the function takes the minimum value.
Derivatives
A derivative means a change. Geometrically it can be represented as a line with some steepness. Imagine climbing a mountain which is very steep and 500 meters high. Is it easier to climb? Definitely not! Suppose walking on the road for 500 meters. Which one would be easier? Walking on the road would be much easier than climbing a mountain.
Concavity
In calculus, concavity is a descriptor of mathematics that tells about the shape of the graph. It is the parameter that helps to estimate the maximum and minimum value of any of the functions and the concave nature using the graphical method. We use the first derivative test and second derivative test to understand the concave behavior of the function.
Average of marginal production Economists use production
functions to describe how the output of a system varies with respect to another variable such as labor or capital. For example, the
production function P(L) = 200L + 10L2 - L3
gives the output
of a system as a function of the number of laborers L. The average product A(L) is the average output per laborer when L laborers are working; that is, A(L) = P(L)/L. The marginal product
M(L) is the approximate change in output when one additional
laborer is added to L laborers; that is, M(L) = dP/dL.
a. For the given production function, compute and graph P, A, and L.
b. Suppose the peak of the average product curve occurs at
L = L0, so that A′(L0) = 0. Show that for a general production function, M(L0) = A(L0).
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