Question

The following estimates were provided; MPL 20-0.4L; and APL= 20-0,2L-320/L i. Over what range of l (variable inputs) should production take place? ii. What is the range of output over the range of labour in (i) ​

Answer 1

Answer: To determine the range of input (L) over which production should take place, we need to find the point at which the marginal product of labor (MPL) is zero:

MPL = 20 - 0.4L

0 = 20 - 0.4L

0.4L = 20

L = 50

So production should take place for values of L less than or equal to 50.

To find the range of output over this range of labor, we can use the average product of labor (APL) equation:

APL = 20 - 0.2L - 320/L

Substituting L = 50, we get:

APL = 20 - 0.2(50) - 320/50

APL = 20 - 10 - 6.4

APL = 3.6

So the range of output over the range of labor from 0 to 50 is approximately 0 to 3.6 units of output.

Explanation: