A firm has production function q = K¹/2L¹/2 and pays w = 8, r = 2. a. The firm produces qo = 2 units of output as lowest cost. Capital should be equal to b. At qo = 2, the Isocost Line will have a vertical intercept equal to C. The firm wishes to expand to q₁ = 4. In the short-run the firm cannot vary its capital. Labour should be equal to

A firm has production function q = K¹/2L¹/2 and pays w = 8, r = 2. a. The firm produces qo = 2 units of output as lowest cost. Capital should be equal to b. At qo = 2, the Isocost Line will have a vertical intercept equal to C. The firm wishes to expand to q₁ = 4. In the short-run the firm cannot vary its capital. Labour should be equal to

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 19PAE

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A widget manufacturer has a production function of the form q= VLK . If the wage rate (w) is $4 and the rental rate on capital (r) is $1. Are the returns to scale increasing, constant, or decreasing for this production Choose... function? What cost minimization combination of K and L will the manufacturer employs to Choose... produce 40 units of output? If the firm wants to decrease output level to 20. What cost minimization Choose... combination of K and L will the manufacturer employs? Suppose that the capital input is fixed at K = 100 units in the short run, what is Choose... the short run total cost function with q
A. Derive the total cost function for the firm B. Suppose the cost of producing 10 units of output is Rs . 150. If the price of capital is Rs . 2 per unit at that level , calculate the price of labour for the same. C. Output expansion path shows how the optimal input usage changes with the change in output , if input prices do not change . Draw a labelled diagram showing iso - cost line and isoquant for Q = 10. Now , show the locus of output expansion path for the firm . Also find an equation for the output expansion path .
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Please no written by hand and no emage Consider the production function q = min{ l /2 , k/ 3 }. Where l is labour, k is capital and q is output. What is the associated cost function if l costs w per unit and k costs r per unit.
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