When the production function is given by $\mathrm { Q } = \mathrm { L } , \mathrm { TC } = \mathrm { wQ } , \mathrm { L } = \mathrm { Q } \text { and } \mathrm { AC } = \mathrm { L }$ .

Question

Quizplus · Accepted Answer

The given production function Q = L implies that the quantity of output (Q) is equal to the quantity of labor (L) used in production, which means one unit of labor produces one unit of output. However, the statement AC = L is incorrect because AC (Average Cost) is calculated as TC/Q (Total Cost divided by Quantity), and given TC = wQ (where w is the wage rate), AC should be calculated as (wQ)/Q = w, not L.

When the Production Function Is Given By Q=L,TC=wQ,L=Q and AC=L\mathrm { Q } = \mathrm { L } , \mathrm { TC } = \mathrm { wQ } , \mathrm { L } = \mathrm { Q } \text { and } \mathrm { AC } = \mathrm { L }Q=L,TC=wQ,L=Q and AC=L

When the Production Function Is Given By $\mathrm { Q } = \mathrm { L } , \mathrm { TC } = \mathrm { wQ } , \mathrm { L } = \mathrm { Q } \text { and } \mathrm { AC } = \mathrm { L }$