Question

Suppose the short run production function can be represented by Q=60000L0^2_1000b^3. Then determine

The level of labor employment that maximizes the level of out put

Answer 1

The level of labor employment that maximizes the level of output is:

$Q'(L) = 120,000L - 3000L^2 = 0,$

3,000L(40 - L) = 0,

L = 0 (is not acceptable), L = 40 units.