# Diminishing Marginal Returns

4. Given the following short-run production function, Q = 1500L + 60LÂ² - LÂ³ where Q is output and L is variable input, find:

a. The point of diminishing marginal returns

b. The point where the elasticity of production is equal to one.

c. The boundary between stage II and stage III

d. Show that marginal product is equal to average product when average product is at its maximum.

https://brainmass.com/economics/output-and-costs/diminishing-marginal-returns-125562

#### Solution Preview

The first thing to solve such questions is to write down all the equations:

Q = 1500L + 60LÂ² - LÂ³

Taking the first order derivative we get the Marginal Product

So MPl = 1500 + 120L - 3LÂ²

Also dividing Q by L we get the average product:

APl = 1500 + 60L - LÂ²

Answer (a):

The point of diminishing marginal returns start when the slope ...

#### Solution Summary

The solution answers a lot of important questions related to marginal cost analysis.