Consider the following short-run production function: q = 5L2 – 1/3 L3

Consider the following short-run production function: q = 5L2 – 1/3 L3. At what level of L do diminishing marginal returns begin? At what level of L do diminishing returns begin?

What will be an ideal response?

ANSWER

MP = 10L – L2. Marginal product peaks when L = 5 and equals zero when L = 10. Thus, diminishing marginal returns begin when L = 5, and diminishing returns begin when L = 10.