QUESTION 3 ABC Manufacturing Company Limited recently hired you to estimate the firm’s production function. Based on your research you have derived the following production function, F(K, L) = KL2. Assuming That capital is fixed at 1 unit, answer the following: a. Calculate the average product of labour when 9 units of labour are utilised b. Calculate the marginal product of labour when 9 units of labour are utilised. (HINT: Recall Marginal requires differential) c. Assuming that capital is no longer fixed and that the price of capital is $10, and the price of Labour is $15. What combination of capital and labour minimizes the cost of producing any Given output?
QUESTION 3 ABC Manufacturing Company Limited recently hired you to estimate the firm’s production function. Based on your research you have derived the following production function, F(K, L) = KL2. Assuming That capital is fixed at 1 unit, answer the following: a. Calculate the average product of labour when 9 units of labour are utilised b. Calculate the marginal product of labour when 9 units of labour are utilised. (HINT: Recall Marginal requires differential) c. Assuming that capital is no longer fixed and that the price of capital is $10, and the price of Labour is $15. What combination of capital and labour minimizes the cost of producing any Given output?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter7: Production Economics
Section: Chapter Questions
Problem 5E
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QUESTION 3
ABC Manufacturing Company Limited recently hired you to estimate the firm’s production function.
Based on your research you have derived the following production function, F(K, L) = KL2. Assuming That capital is fixed at 1 unit, answer the following:
a. Calculate the average product of labour when 9 units of labour are utilised
b. Calculate the marginal product of labour when 9 units of labour are utilised. (HINT: Recall Marginal requires differential)
c. Assuming that capital is no longer fixed and that the price of capital is $10, and the price of Labour is $15. What combination of capital and labour minimizes the cost of producing any Given output?
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