2. Consider the following information of a hypothetical firm: Q = 100K0.6 L0.8; w = :1; r = 3 A. Solve for the cost-minimizing quantity of capital (K*) and labor (L*), and the minimum cost (C*) if the firm targets to produce 3,000 units of output. B. If target output increases to 6,000 units, solve for the new cost-minimizing quantity of capital and labor, and the minimum cost. C. Graphically illustrate the expansion path for the firm if it decides to increase its target output from 3,000 units to 6,000 units.

2. Consider the following information of a hypothetical firm: Q = 100K0.6 L0.8; w = :1; r = 3 A. Solve for the cost-minimizing quantity of capital (K) and labor (L), and the minimum cost (C*) if the firm targets to produce 3,000 units of output. B. If target output increases to 6,000 units, solve for the new cost-minimizing quantity of capital and labor, and the minimum cost. C. Graphically illustrate the expansion path for the firm if it decides to increase its target output from 3,000 units to 6,000 units.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 8SCQ: Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are...

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