How might the firm increase labors average productivity

Reference no: EM13200370

Suppose we have a single-variable input production function such a Q=f(L), where L is the number of workers and Q the quantity of output per day. Workers are paid a flat salary of $200 per day. How will the labor cost per unit of output be affected if output is subject to
(a) diminishing returns

(b) increasing returns?

How might the firm increase labor's average productivity?

On a related matter, suppose as production expands. the average productivity of labor increases by 25%. By how much will the labor cost per unit decline?

Reference no: EM13200370

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