Examine production function

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Reference no: EM1368068

The manager of a national retailing outlet recently hired an economist to estimate the firm's production function. Based on the economist's report, the manager now knows that the firm's production function is given by Q = K^(1/2)*L^(1/2) and that capital is fixed at 1 unit.

a. Calculate the average product of labor when 9 units of labor are utilized.

b. Compute the marginal product of labor when 9 units of labor are utilized.

c. Assume the firm can hire labor at a wage of $10/hr and output can be sold at a price of $100 per unit. Determine the profit maximizing levels of labor and output.

d. What is the maximum price of capital at which the firm will still make non-negative profits?

Reference no: EM1368068

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