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The Production Function of a perfectly competitive firm is Q = 80L +12L2 -0.5L3, where Q...

The Production Function of a perfectly competitive firm is Q = 80L +12L2 -0.5L3, where Q = Output and L = labor input

      a. At what value of L will Diminishing Returns take effect?

      b. Calculate the range of values for labor over which stages I, II, and III occur?

     c. Suppose that the wage rate is $30 and the price of output is $2 per unit. How many

          workers should the firm hire?

      d. At what value of L will Q be at its maximum? What is the maximum amount of Q?

      e. If demand forecasts predict an output level of between 1400 and 1600 in the next

          decade, what would be your long-run strategy to optimize the resources of your

         company?

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Expert Solution

Rahul Sunny answered 1 year ago
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