The owner of a car wash is trying to decide on the number of people to employ based on the following short-run production function: Q = 6L - 0.5L2, with the corresponding marginal product of labor equation, MPL = 6 - L.
a. Generate a schedule showing total product, average product of labor, and marginal product of labor using a range of labor inputs 0 to 6.
b. Plot the production function and the APL and MPL on two graphs.
c. Suppose the price of a basic car wash is $5. How many people should be hired if each worker is paid $6 per hour?
d. If the owner can hire students on a part-time basis for $4 per hour, should he hire assuming he/she keeps the other workers and continues to pay them $5 per hour?
The solution answers the question(s) below.