Consider the production function Q = 20K 1/2 L 1/2. The firm operates in the short run with 100 units of capital.a. The firm’s short-run production function is Q = __________.c. The average product of labor function is AP = __________.d. The marginal product of labor function is MP = _________. Show that the marginal diminishes for all levels of labor usage.e. Assuming that the firm in question 2 is in the long run where its fixed endowment is $1000, wage rate is $10, and interest payment for capital is $5, what is the combination of capital-labor ratio that will maximize output? Show the graphical combination. Assume that the wage rate falls to $5, what is the new combination on the same graph?f. What kind of returns to scale is depicted for each of the Cobb-Douglas production functions below? Explain. Q = K 1/4 L 1/4; Q = K 1/2 L 2/3
Q is the short-run production function of the firm. The average product of labor function is the AP. The marginal product of labor function is the mp. Show that the marginal goes down for all levels of labor usage.