A company produces soaps using the following production function: Q = (K*L0.5)/10, for which L = labour hours and K = capital.Consider factor prices PL= 2 and PK= 4, and assume a short-run scenario for the firm, in which fixed cost is $200.a. Determine short-run fixed cost, variable cost, and total cost function. Plot curves.b. Determine short-run total average cost function and graph.c. With what combination of labour and capital can you produce 400 units of soaps in the short run? Quantify your answer. Calculate how much the 400 soaps cost you in total and on average and show your results on the graphs above.d. For the production of 400 soaps, show numerically the relationship between the average product of labour used and the average variable cost. ASAP
A company produces soaps using the following production function:
Q = (K*L0.5)/10, for which L = labour hours and K = capital.
Consider factor prices PL= 2 and PK= 4, and assume a short-run scenario for the firm, in which fixed cost is $200.
a. Determine short-run fixed cost, variable cost, and total cost function. Plot curves.
b. Determine short-run total average cost function and graph.
c. With what combination of labour and capital can you produce 400 units of soaps in the short run? Quantify your answer. Calculate how much the 400 soaps cost you in total and on average and show your results on the graphs above.
d. For the production of 400 soaps, show numerically the relationship between the average product of labour used and the average variable cost.
ASAP
Step by step
Solved in 2 steps with 2 images
