Suppose the production function for T-shirts can be represented as q = L0.25K0.75. Show that the marginal productivity of labor diminishes in the short run
What will be an ideal response?
In the short run, MPL = 0.25 ? (q/L). The change in MP with respect to L equals
d(MPL)/dL = -0.25 ? q/L2. Thus, for all levels of labor hired, MPL falls as L increases.
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Answer the following statement true (T) or false (F)