# A firm can manufacture a product according to the production function Q = 2(K) 1/2 (L) 1/2

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## Question:

A firm can manufacture a product according to the production function Q = 2(K)^{1/2}(L)^{1/2} where K represents capital equipment and L is labor. The company has already spent $10,000 on the 4 units capital.

a. Calculate the average product of labor, APL and the marginal product of labor, MPL.

b. If workers at the firm are paid a competitive wage of $100 and the product is sold for $200 each, what is optimal level of labor usage and what is the maximum profit?

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