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Suppose the production function is given by Q = min{6K, L}. What

is the average product of labor when 2 units of labor and 10 units
of capital are employed?

1 Answer

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Final answer:

The average product of labor is calculated as the total output divided by the amount of labor. In this case, with 2 units of labor and the production function Q = min{6K, L}, the output is limited by labor, giving us 2 units of output. Thus, the average product of labor is 1 unit per labor employed.

Step-by-step explanation:

The question pertains to the average product of labor, which is a concept from production theory in economics. The production function provided is Q = min{6K, L}, which shows that the quantity of output (Q) is determined by the least of either six times the amount of capital (K) or the amount of labor (L). When 2 units of labor and 10 units of capital are employed, we need to find the limiting factor. Given 10 units of capital, the maximum output using capital is 6 x 10 = 60 units. However, with only 2 units of labor employed, the maximum output using labor is 2 units since labor is the limiting factor in this scenario.

The output is therefore 2 units, and since the average product of labor is the total output (Q) divided by the amount of labor (L), in this case, the average product of labor is Q/L = 2/2 = 1.

This means that each unit of labor is producing on average 1 unit of output.

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