Question

Suppose the short run productiin function can be represented by Q=60,000L²-1000L^3. then, determine

A) the level labor employement that maximizes the level of output

B) the level of employement that maximizes APL and the maximum APL

Answer 1

$Q=60000L^2-1000L^3,$

$Q=0,$

$L=\frac{60000}{1000}=60,$

$APL=Q'=120000L-3000L^2,$

$APL=0,$

$L=\frac{120000}{3000}=40,\implies$

$Q=60000\cdot 40^2-1000\cdot 40^3=32000000.$