2. A firm producing hockey sticks has a production function given by: q = 2 vkl In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental rate for k is v=$1, and the wage rate for / is w=$4. (a) Calculate the firm's short-run total cost curve. Calculate the short-run average cost curve. (b) What is the firm's short-run marginal cost function? What are the SC, SAC, and SMC for the firm if it produces 25, 50, 100 and 200 hockey sticks? (c) Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will always intersect the SAC curve at its lowest point.

2. A firm producing hockey sticks has a production function given by: q = 2 vkl In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental rate for k is v=$1, and the wage rate for / is w=$4. (a) Calculate the firm's short-run total cost curve. Calculate the short-run average cost curve. (b) What is the firm's short-run marginal cost function? What are the SC, SAC, and SMC for the firm if it produces 25, 50, 100 and 200 hockey sticks? (c) Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will always intersect the SAC curve at its lowest point.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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