BUS 207 Lecture Notes - Average Variable Cost, Diminishing Returns, Production Function

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 207

Document Summary

At what level of input l does diminishing returns start? (b) A firm uses only one variable input and faces the following average cost function: Ac = q2 - 12q + 108 + 10/q. Calculate the output level (q) at which diminishing returns set in. A production process uses only one input, labor, and is described by the following production function: Q = 24l2 - 1/3 l3 (note: this function is applicable only for labor input rates between 0 and 72. ) Calculate the range of values for labor over which stage ii occurs. Suppose the production function for widgets is given by: Q = kl - 0. 8k2 - 0. 2l2 where q represents the quantity of widgets produced, k represents the annual capital input and l represents annual labor input. (a) For k = 10, what is the average productivity of labor equal to? (b) How many widgets are produced at this point? (c)