The quadratic production function
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The harvesting of coffee is characterized by a quadratic production schedule as follows:
No. of Coffee
Laborers harvested
in kgms
0 0
1 200
2 450
3 620
4 780
5 850
6 920
7 950
8 980
9 1000
10 950
If the wage rate is $100 a day and the price of green coffee is $5.00 per kgm, find
(a) the quadratic production function,
(b) the optimum number of laborers to hire and (c) the maximum profit.
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Solution Summary
The quadratic production function is applied in this case.
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Answer:
The quadratic production function is given by
, (1)
where Q = the quantity and L = number of laborers.
The production function can be estimated by the method of least squares by solving the following normal equations:
(2)
(3)
(4)
Where and
...
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