a)
To Calculate:The average product of labor when capital is 81units and variable input, labor is 16units and also whenvariable input, labor changes to 256units.
a)
Explanation of Solution
b)
To calculate:Marginal product of labor.
b)
Explanation of Solution
c)
To calculate: Number of labor that a firm should hire.
c)
Explanation of Solution
Number of labors hired to maximize the profit.
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Chapter 5 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
- A firm can manufacture a product according to the production function: Q = F(K, L) = K3/4L1/4.a. Calculate the average product of labor, APL, when the level of capital is fixed at 81 units and the firm uses 16 units of labor. (Enter your responses rounded to three decimal places)(Part of A): What is the average product of labor when the firm uses 256 units of labor?Answer:b. Find an expression for the marginal product of labor, MPL, when the amount of capital is fixed at 81 units. (The second response is the exponent on L in the expression. Enter your responses rounded to two decimal places).MPL = × L ^ Then, illustrate that the marginal product of labor depends on the amount of labor hired by calculating the marginal product of labor for 16 and 81 units of labor. (Enter your responses rounded to three decimal places).MPL when L = 16: MPL when L = 81: c. Suppose capital is fixed at 81 units. If the firm can sell its output at a price of $200 per unit of output and can hire labor at…arrow_forwardA firm can manufacture a product according to the production function Q = 2(K)1/2 (L)1/2 where K represents capital equipment and L is labor. The company has already spent $10,000 on the 4 units capital. Please show the expression for the average product of labor, APL and the marginal product of labor, MPL.arrow_forwardSuppose the production function is given by 0 = 2K - 5L What is the marginal product of labor when 15 units of capital and 10 units of labor are employed?arrow_forward
- Asap A firm has the following linear production function: Q = 6K + 9L The firm currently owns 10 units of capital (K) and hires 30 workers (L). A) What is the marginal product of labor? B)What is the marginal product of capital?arrow_forwardConsider the following production function: Q = (6L + 3K)¹/2 1. What is the Marginal Product of Labor (MPL)? What is the Marginal Product of Capital (MPK)? Are they diminishing? 2. What is the Average Product of Labor (APL)? What is the Average Product of Capital (MPK)? 3. What is the TRSL,K? Is the absolute value of TRSLK diminishing in L or K? 4. Are there constant, decreasing, or increasing returns to scale?arrow_forwardA firm uses the inputs of Iron and labor to produce Cars. Suppose that the quantity of labor is fixed. The quantity of Iron and the number of Cars produced is given by the following table: Tons of Iron per week Number of Cars per week 0 0 10 50 20 100 30 170 40 220 50 250 60 260 70 250 80 200 What is the average product of Iron when 40 tons are used? What is the marginal product of the 60th ton Iron? Does this production function exhibit diminishing marginal returns? If so, at what quantity of Iron do they start to occur?arrow_forward
- Consider a firm that produces a good using capital and labor. We denote by L the quantity of labor and by K the quantity of capital. In the short term, the firm has a fixed amount of capital K. The short-run production function of the firm is given by f (K; L). Graphically, we measure the amount of work on the abscissa and the output on the ordinate. The average product of labor is (a) the slope of the production function. (b) the area that is below the production function. (c) Both of the above answers are correct. (d) None of the above is correct.arrow_forwardA farmer uses a certain technology that produces electricity. His production function is given as: q = f (k, l) = 1000k¹⁰/20 – 201³ Where q is the no. of megawatts of electricity his company is producing. Suppose that their electrical generators, k=20, calculate for the following: 1. Marginal product of labor 2. Average product of labor if k=20 3. If k decreases from 20 to 17, calculate the new MP of labor and the average product. Explain intuitively what happens to the MP and the average product.arrow_forwardWhat is the difference between a fixed input and a variable input?arrow_forward
- Question 8 of 13 The following diagram depicts the production function of the farmers, where diminishing average product of labour is assumed. At A the average product of labour is 500,000/800 = 625 kg of grain per farmer. At B the average product of labour is 732,000/1,600 = 458 kg of grain per farmer. If you know that for 2,800 farmers the grain output is 894,000kg, then which of the following is/are correct? Kilogrammes of grain produced (thousands) 900 800- 700- 600- 500 400- 300- 200- 100- 0 0 400 800 B 1,200 1,600 Number of farmers 2,000 2,400 2,800 OA. The average product of labour when the labour input is 2,800 is 300. OB. The decreasing slopes of the rays from the origin to the production function along the curve indicate the decreasing average product of labour. OC. If the production function curve is an upward-sloping straight line, then there is no diminishing average product of labour. OD. It is possible that initially there is an economy of scale: for example, going from…arrow_forwardSuppose the production function is given by Q = 5K+2L. What is the marginal product of capital when 5 units of capital and 10 units of labor are employed?arrow_forward
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
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