A firm has a production function q = min [L-OKO.6 2M] (a) Find the firm's optimality condition for its factor mix of K andL given that it wants to produce amount q* of output. (b) Calculate the firm's long run cost function C(q) and interpret it. (c) If all firms in a particular industry have this production function, what would this imply about
A firm has a production function q = min [L-OKO.6 2M] (a) Find the firm's optimality condition for its factor mix of K andL given that it wants to produce amount q* of output. (b) Calculate the firm's long run cost function C(q) and interpret it. (c) If all firms in a particular industry have this production function, what would this imply about
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A firm has a production function
q = min [L-OKO.6, 2M]
(à) Find the firm's optimality condition for its factor
mix of K and L given
that it wants to produce amount q* of output.
(b) Calculate the firm's long run cost function C(q)
and interpret it.
(c) If all firms in a particular industry have this
production function, what would this imply about
the viability of long run competitive equilibrium?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcbab2b14-4818-4816-9151-8a5501679532%2Ff669ebdf-1fad-4b0f-adbd-5935815efde6%2F995be8j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A firm has a production function
q = min [L-OKO.6, 2M]
(à) Find the firm's optimality condition for its factor
mix of K and L given
that it wants to produce amount q* of output.
(b) Calculate the firm's long run cost function C(q)
and interpret it.
(c) If all firms in a particular industry have this
production function, what would this imply about
the viability of long run competitive equilibrium?
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