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Suppose q=E^.5K^.5. Inthe short run, the firm has a fixed level of capital, K0=100 a.Plot the...

Suppose q=E^.5K^.5. Inthe short run, the firm has a fixed level of capital, K0=100

a.Plot the total product of labor curve for 0≤E≤16.

b.Plot the marginal product of labor and average product of labor curves for 0≤퐸≤16

.c.Suppose that the price of output is $10 per unit. Plot the value of marginal product of labor and value of average product of labor curves for 0≤E≤16

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Answer #1

Given that q=E^.5K^.5. In the short run, the firm has a fixed level of capital, K0=100. Then the production function becomes q = 10E^0.5.

a. The function for the total product of labor curve is q = 10E^0.5. For 0?E?16, it is plotted below

b.The marginal product of labor is dq/dE = 10*0.5/E^0.5 or 5/E^0.5. The average product of labor IS q/E = 10/E^0.5. These curves for 0?E?16 are drawn below

.c.The price of output is $10 per unit. The value of marginal product of labor is 10*5/E^0.5 or 100/E^0.5. Similarly the value of average product of labor is 10*10/E^0.5 = 100/E^0.5

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