1/4 3/4 1. Suppose the total-cost function for a firm is given by C = qw" a. Use Shephard's lemma to compute the (constant output) demand functions for each input, k and 1. b. Calculate the average cost and marginal cost. c. Describe the returns to scale for the underlying production function for q.

1/4 3/4 1. Suppose the total-cost function for a firm is given by C = qw" a. Use Shephard's lemma to compute the (constant output) demand functions for each input, k and 1. b. Calculate the average cost and marginal cost. c. Describe the returns to scale for the underlying production function for q.

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Problem 1QTC

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Question

1. Suppose the total-cost function for a firm is given by C = qw
1/4 3/4
a. Use Shephard's lemma to compute the (constant output) demand functions for each input,
k and 1.
b. Calculate the average cost and marginal cost.
c. Describe the returns to scale for the underlying production function for q.

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Step 2: Calculate the Demand for Capital (K) and Labor (L):

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Step 3: Calculate the average Cost (AC) and marginal Cost (MC)

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