2. Assume that a firm has the following production function; q = L0.5K0.5. Its capital is fixed at K = 1. It faces a rental rate of r = $90 and a wage rate of W = $10. a. Calculate the firm's fixed costs. b. Determine the firm's variable cost function. c. Determine the firm's short run cost curve.
2. Assume that a firm has the following production function; q = L0.5K0.5. Its capital is fixed at K = 1. It faces a rental rate of r = $90 and a wage rate of W = $10. a. Calculate the firm's fixed costs. b. Determine the firm's variable cost function. c. Determine the firm's short run cost curve.
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.3P
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