The production function for a firm is q=−0.6L^3+18L^2 K+10L where q is the amount of output, L is the number of labor hours per week, and K is the amount of capital. The wage is w = $100 and the rental rate is r = $800 per time period. a. Using Excel, calculate the total short-run output, q(L), for L = 0, 1, 2, …, 20, given that capital is fixed in the short run and K = 1. Also calculate the average product of labor; APL, and the marginal product of labor, MPL. MPL=−1.8L^2+36L+10 b. For each quantity of labor in (a), calculate the variable cost, VC; the total cost, C; the average variable cost, AVC; the average cost, AC; and the marginal cost, MC. Using excel, draw the AVC, AC, and MC curves in a diagram.
The production function for a firm is
q=−0.6L^3+18L^2 K+10L
where q is the amount of output, L is the number of labor hours per week, and K is the amount of capital. The wage is w = $100 and the rental rate is r = $800 per time period.
a. Using Excel, calculate the total short-run output, q(L), for L = 0, 1, 2, …, 20, given that capital is fixed in the short run and K = 1. Also calculate the average product of labor; APL, and the marginal product of labor, MPL.
MPL=−1.8L^2+36L+10
b. For each quantity of labor in (a), calculate the variable cost, VC; the total cost, C; the
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
