(Answered) A firm that manufactures office desks has the following

Economics

A firm that manufactures office desks has the following production function in the short run:

Q = 400 L^0.8 K^0.5

where

Q = the quantity of chairs produced in a month

L = the amount of labor (hours of work) used in a month

K = the amount of capital (building, machines, equipment) used.

Assume that in the short run L = 1,000 and K = 100.

a. What is the quantity produced if L = 1,000 and K = 100?

b. What is the quantity produced if L = 1,200 and K = 100?

c. What is the quantity produced if L = 1,400 and K = 100?

d. Does the law of diminishing marginal returns to labor apply to the production process? Why? Why not?

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Business Economics, Economics

Category:- Business Economics
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