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Homework answers / question archive / The production function of a good is f(L) = L0
The production function of a good is f(L) = L0.5 where L is labor.
Labor supply is function of wages given the function L = 90 + 1.1w3
What is the productivity of wage at wage level equal to $10?
Thank's
Abdulrahim Taysir
When wage = 10
Then labor supply is
L = 90 + 1.1W3
L = 90 + 1.1× 10*3
L = 90 + 1100
L = 1190
now to find out productivity of labor we differentiated the production function with respect to L
F'(L) = 0.2/L*0.5
F'(1190) = 0.2/ (1190)*0.5 = 0.2/34.49 = 0.005