Reference no: EM13125294
Suppose the production function for guitars is given by:
q = LK - 4L2
where q is the number of guitars manufactured per week
L is the number of person-hours per week
K is the number of machine-hours per week.
i) If K = 50, derive the total product function and draw it over the range of L = 0 to L = 75. (4 marks) Sketch the marginal product and the average product curves.
At what level of L does the average product reach its maximum?
At what level of L does the marginal product reach its maximum?
ii) Duplicate your analysis in part i) using K = 75.
iii) When K = 50 or when K =75, does the total product curve have a region of increasing marginal returns?
Does it have a region of diminishing returns?
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