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A firm has the following short-run production function where Q Quantity of output per week When does the law of diminishing returns take

A firm has the following short-run production function: Q = 50 L + 6L2 - 0.5L3 where Q = Quantity of output per week L = Labor (number of workers) a. When does the law of diminishing returns take effect? b. Calculate the range of values for labor over which Stages I, II, and III occur. c. Assume each worker is paid $10 per hour and works a 40-hour week. How many workers should the firm hire if the price of the output is $10? Suppose the price of the output falls to $7.50. What do you think would be the short-run impact on the firm s production? The long-run impact?

Apr 08 2020 View more View Less

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