ct2_Memo.pdf - EECM3714: INTRODUCTORY MATHEMATICAL...

EECM3714: INTRODUCTORY MATHEMATICAL ECONOMICS
CLASS TEST 2 MEMO: MARKS = 25; TIME = 50 MINUTES
1) KrustyCo produces and sells needles. Its production function is ??𝑳
?
− ?.??𝑳
?
a. Write down the average product of labour (APL) function for KrustyCo. [ 1 ]
.
b. Write down the marginal product of labour (MPL) function for KrustyCo. [ 1 ]
c. Write down the first-order condition for the maximisation of APL for KrustyCo. [ 1 ]
d. What level(s) of 𝑳 satisfies (satisfy) this first-order condition for the maximisation of APL? [ 2 ]
e. Write down the value of the second derivative of the APL of KrustyCo at the APL maximising level(s) of 𝑳 . [ 2 ]
f. Find the value(s) of APL at the APL maximising level(s) of 𝑳 . [ 1 ]
.
g. Find the value(s) of MPL at the APL maximising level(s) of 𝑳 . [ 1 ]
1
2) Itchy & Scratchy International produces and sells pins. Its inverse demand function is ? = ?? − ?? , while its cost
function is ? =
?