Question

Now Joe's coffee house operates under the production functiorn Q- while labor is variable. Which statement correctly describes Joe's total product (of labor) curve? 4L2K3. Toe is still stuck with 2 coffee machines in the short-run A. Total product increases at a decreasing rate. Total product initiallv ncreases at an increasing rate and eventually increases at a decreasing rate. Total product decreases. B. C. D. Total product increases at an increasing rate.

Answer 1

The given production function is

Q=4L²K³

Since the given fixed capital is 2 units.

Q=4(L²)(2)³

Q=32(L²)

When L=1

Q=32(1²)

Q=32

When L=2

Q=32(2²)

=128

When L=3

Q=32(23²)

=288

When L=4

Q=32(4²)

=512

Similarly as the labor increases the output increases at increasing rate.

As it can be seen in the calculation as Labor increase the output increases at increasing rate.

Hence option D is the correct answer.