1. Prunella raises peaches. L is the number of units of labour she uses and T...

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1. Prunella raises peaches. L is the number of units of labour she uses and T...

1. Prunella raises peaches. L is the number of units of labour she uses and T is the number of units of land she uses, her output (bushels of peaches), denoted as Q, is given by Q = √ LT .

(a) Consider the short-run decision, in which she has a fixed amount of land (T = 9). Does this production function exhibit the diminishing marginal return on the labour input? Explain your answer.

(b) If she uses 4 units of labour, then what is the marginal product of labour? What does it mean?

(c) If she can sell peaches at the price of $5, and she has to pay the wage rate at $4, then how many units of labour does she employ?

business economics

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