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    Question

    Consider the following production function

    Q = 20L – 0.2L2 – 20K + 0.2 K2 + 4KL

    If 20 units of capital is used , what is the upper limit of labor that a rational producer will use?

    A 100 Correct Answer Incorrect Answer
    B 150 Correct Answer Incorrect Answer
    C 200 Correct Answer Incorrect Answer
    D 250 Correct Answer Incorrect Answer

    Solution

    Producer will use labour upto the point where MPL is greater or equal to 0. So, MPL ≥ 0

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