In: Economics
Brine Freez sells salty ice cream. Their daily production is
given by the function:
Q...
Brine Freez sells salty ice cream. Their daily production is
given by the function:
Q = 10 + K + 4L + 20KL – K2 – 2L2
Where Q is servings per day, K is capital (set at 1), and L is
labor.
- (10) Describe in words what the production function
equation is saying. Be clear about units of measure. What is the
general shape of this function?
- Using the appropriate data set above,
- (10) Calculate the marginal product of labor and show
in simplest form. (Show work.)
-
- (10) Explain in your own words what exactly this
marginal product number means (what it is measuring) when L =
2.
- (10) Calculate the number of workers (L) that would
maximize Brine Freez output (Lmax). (Show your work for
partial credit.
-
- (5) What is the predicted number of Brine Freez servings that
results from hiring this number of workers (L)?