Question

Q = 120 L +6L -0.4L 1. What is the maximum level of production (Q) in units that this firm can attain per week? 2. At what level of labor utilization (L) is the Average Productivity of Labor maximized? PLEASE DO NOT ROUND-OFF YOUR LEVEL OF L. What is the APL or average production, in units, when APL reaches its maximum? 3. Beyond what level of labor utilization (L) does the Law of Diminishing Marginal Returns (or Productivity) begin to take effect? What is the marginal or additional contribution to total production or of this last unit of labor added? U

Answer 1

Here the production for its given by 9 = 120L + 61² -0.4L at the optium my MPL should be vuo. > MPL = 120 + 122 - 0.4X329 = 120 + 122 - 1.2 12 meo - 1.22 – 12L - 1201 = 0 > 2-101 - 1000 Tot 702 +4 XIX 103 104 WI5 GO 2X1 = 10+ 22.36 - = (16, 18) X (-1.24) 2 the optium labor can't be negative implied the N optim labor is = 16.18. So, the maximm. prodes is given by - 9 = 120L +62-6.432 w s 1120 (16:18) + 6(1610) 0-4 (1848) q* = 1,818.03 7. Given the process for the All is given below. APL = 912 = 120 + 6h - 0.42 d l vill at the optium dAPL - 2. ill also = 6 -0.4X22 -0 = 6/0.8 7.5 AS90 At this amount of labor the maxium All is given by - ALL = 120+6L - 0.4L² = 142.5 70.

Given the prodem for the MPL is given below 9 = 120L + 62² _ 0.48 NON 601 MPL = 120 + 12L - 1.22 , at the optium AMPL = 0 & 12-2.4L = 0 = (x = 12/2.4 25 So, the mp is mortimun art "L* = 5" & beyond ( = 5" me starts falling implied "leur of diminishing marginal Return" begin. 08 At ex = 5, the corresponding me is will MPL = 120 + 122 - 1.2 1² = 120 + 12x5 - 1.2 (5) = 150 to prodes at this ant So, the additional amount of of later is "150 units".