Question

Suppose that a firm has the following production function:

                  

Q = 12KL + .7KL2 – 1/30 KL3

                  

Assume the firm is operating in the long run show the expression for 100 units of output

Now the firm is operating in the short run and capital (K) is fixed at K = 5, to determine the following:

a.	The maximum output the firm can produce when K = 5.

b.	The level of use of input L where APL is at a maximum.(Assume that partial units of labor are possible)

c.	The output level where diminishing marginal returns to input L occurs.

Answer 1