4. For production functions i) q = K0.25L0.25, %3D ii) q = K0.5Lº.5. iii) q = KL a) Assume w= $20 and v = $20, what are the long-run MC and AC equations? b) Tun the MC functions into firmlong-run supply equations. c) Graph the MC and AC functions. Assume that the price of output is $20, explain how the q = q(p = $20) might or might not be a profit-maximizing outcome and whether the

4. For production functions i) q = K0.25L0.25, %3D ii) q = K0.5Lº.5. iii) q = KL a) Assume w= $20 and v = $20, what are the long-run MC and AC equations? b) Tun the MC functions into firmlong-run supply equations. c) Graph the MC and AC functions. Assume that the price of output is $20, explain how the q = q(p = $20) might or might not be a profit-maximizing outcome and whether the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Consider a competitive market where there are two types of firms, Type A and Type B, with total cost functions TC(q) = 2+4q+q² TCB (q) = 8+4q+6q² (a) Derive the short-run supply curve for each firm type (b) What is the short-run market supply, if there are 6 Type A firms, and 12 Type B firms? What is total quantity produced when p=10? (d) How does your answer at (c) change if we consider long run supply rather than short run? Here, assume again that p=10 and that there are 6 Type A firms and 12 Type B firms.
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