Suppose that production function of certain devices is determined by: q = k * L - 0.8 k2 - 0.2 L2 Where q represents annual quantity of devices produced, k represents annual quantity of capital factor, and L represents annual quantity of labor factor. (a) Suppose k = 10; draw a graph with average and total labor productivity. What is level of labor (L) factor at which average productivity reaches a maximum? How many devices are produced at that point? (b) Assuming again that k = 10, plot Marginal Product (MP) curve. At what level do we have that labor (L) factor is MP = 0? (c) Suppose capital (k) factor were to increase to k = 20. How would your previous answers change?
Suppose that production function of certain devices is determined by:
q = k * L - 0.8 k2 - 0.2 L2
Where q represents annual quantity of devices produced, k represents annual quantity of capital factor, and L represents annual quantity of labor factor.
(a) Suppose k = 10; draw a graph with average and total labor productivity. What is level of labor (L) factor at which average productivity reaches a maximum? How many devices are produced at that point?
(b) Assuming again that k = 10, plot Marginal Product (MP) curve. At what level do we have that labor (L) factor is MP = 0?
(c) Suppose capital (k) factor were to increase to k = 20. How would your previous answers change?
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Was there an error in calculation of average productivity?
Since Function q = 10 L - 80 - 0.2L^2 then q/L = 10 - 80/L - 0.2 L, correct?
Can you verify? Thanks
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