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Q. A company has the production function in the short term:Q = 50L + 6L2 - 0.5L3
Where: Q = weekly productionL = labor (number of employees)
a. When does the law of diminishing returns take effect?
b. Compute the value range of labor that occurs during phases 1, 2 and 3.
c. Assume that each worker makes $ 10 an hour and works 40 hours per week. How many workers to hire the firm if the product price is $ 10. Assume the price falls to $ 7.50. What think would be a short-run impact on the production of the company? What would be the long term?
At what level of output are total profit maximized. Illustrate what price will be charged.
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