GoodAttempt
Member
- Joined
- Sep 10, 2011
- Sythe Gold
- 6
- Messages
- 40
Not entirely sure what to do and my study group bailed for tonight and my exam is tomorrow :C
1. Suppose a firm has a production fuction given by q=2*(K*L)^0.5.Capital is fixed at K=100 with a rental rate of v=$4. Labor is hired at a rate of w= $8.
A) What is the firm's short-run total cost function?
I wrote TC=8L+4K
B)What is the firm's short-run average cost function?
I wrote 8L+4K/2(K*L)^0.5
C)How much are fixed costs?
I wrote 400
2.Now consider the long run where the amount of capital is no longer fixed. Use the same information from the firm above.
A)if the RTS(lk) =K/L what is the cost minimizing condition for the firm?
B)Now suppose that capital is no longer fixed. In the long run, how much labor will the firm hire to produce 200 units?
C) In the long run, how much capital will the firm hire to produce 200 units?
Dont understand #2 at all :S
Any information on how to do #2 is much appreciated!
1. Suppose a firm has a production fuction given by q=2*(K*L)^0.5.Capital is fixed at K=100 with a rental rate of v=$4. Labor is hired at a rate of w= $8.
A) What is the firm's short-run total cost function?
I wrote TC=8L+4K
B)What is the firm's short-run average cost function?
I wrote 8L+4K/2(K*L)^0.5
C)How much are fixed costs?
I wrote 400
2.Now consider the long run where the amount of capital is no longer fixed. Use the same information from the firm above.
A)if the RTS(lk) =K/L what is the cost minimizing condition for the firm?
B)Now suppose that capital is no longer fixed. In the long run, how much labor will the firm hire to produce 200 units?
C) In the long run, how much capital will the firm hire to produce 200 units?
Dont understand #2 at all :S
Any information on how to do #2 is much appreciated!