Question

Consider the following short-run production function: q = 2L 2 - (1/3)L 3. At what level...

Consider the following short-run production function: q = 2L 2 - (1/3)L 3. At what level of L do diminishing marginal returns begin?

L = 3

L = 4

L = 2

L = 1
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Homework Answers

Answer #1

Given,

When L = 1

When L = 2

When L = 3

When L = 4

L Q MPL
1 1.67 1.67
2 5.33 5.33 - 1.67 = 3.67
3 9.00 9 - 5.33 = 3.67
4 10.67 10.67 - 9 = 1.67

From the above table we can see the Marginal Product of labour for the 3rd unit of labour is equal to the MPL of 2nd unit of labour. That is MPL is constant. While for the 4th unit of labour the MPL has decreased.

4th unit of labour because for 3rd unit it has not decreased.

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