Compute the output that can be produced in this firm

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Return to Question 1 above and now calculate and plot the AP and MP curves.

Question 1

Suppose you are told by a production engineer that the relationship between output Q on the one hand and input, in the form of labour (L), on the other is Q = 5 √ L. Capital is fixed, so we are operating in the short run.

(a) Compute the output that can be produced in this firm using 1 through 9 units of labour by substituting these numbers into the production function.

(b) Draw the resulting T P curve to scale, relating output to labour.

(c) Inspect your graph to see that it displays diminishing MP.

Reference no: EM131072336

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