A firm has the production function y = 4LK. The marginal products are given by MP, = 4K and MPK = 4L. (a) Provide an expression for the long run total cost function. (b) Now suppose that w =r = 25. Write out the expression for the long run total cost curve, and plot it on a graph. 1 (c) With w =r = 25, derive the long run average cost curve, and plot it on a graph. Does this firm experience increasing or decreasing average cost, as the output increases?

A firm has the production function y = 4LK. The marginal products are given by MP, = 4K and MPK = 4L. (a) Provide an expression for the long run total cost function. (b) Now suppose that w =r = 25. Write out the expression for the long run total cost curve, and plot it on a graph. 1 (c) With w =r = 25, derive the long run average cost curve, and plot it on a graph. Does this firm experience increasing or decreasing average cost, as the output increases?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Don't use ai to answer I will report your answer

A: Step-by-Step Analysis Step 1: Understanding the Graph: The graph shows the Marginal Physical Product…

Q: 1. Consider a firm which produces according to the following production function by using labor and…

A: Total cost refers to the expenses incurred by the producer in the production of goods or services.…

Q: Draw an example of the Total Fixed Cost, Total Variable Cost, and Total Cost of a company whose…

A: Total Cost: The term total cost refers to the sum of all the costs that are used in the production…

Q: Explain the relation between average variable cost and marginal cost for both the short-run and…

A: Cost Curves show the relation between the costs that a firm incur in the process of production and…

Q: Suppose you run a factory whose short-run production function is given by f (L) = 180L² – 3L³. (a)…

A: TPL = 180L2 - 3L3 APL = TP/L = 180L - 3L2 MPL = CHANGE IN TP/CHANGE IN L = 360L - 9L2

Q: Write down the problem the car manufacturer solves to find the levels of 'K' and 'L' that minimize…

Q: Suppose that a firm's production function is: Its marginal product functions are: q=101050.5 112 98-…

A: The production function is The cost of a unit of labor is $50.The cost of a unit of capital is…

Q: As a production process requires labor L and capital K, q = F (L, K). The wage for a labor is $500,…

A: The optimal level of labor and capital is given by the point where the marginal rate of technical…

Q: (a) Suppose we have the following production function: Q = K²/³12/3. Does the technology have…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Prunella raises peaches where L is the number of units of labor she uses and T is the number of…

A: Slope of isocost line is the negative price ratio between the two goods.

Q: Ebba Kantzen says the following: "I am currently producing 10,000 pizzas per month at a total cost…

A: Cost can be defined as a concept that shows the amount of expenditure and any other sacrifice such…

Q: Does this production function exhibit constant returns to scale? Using the marginal products you…

A: To evaluate if the production function displays consistent returns to scale, we must first see if…

Q: A firm faces the production function: q=10L^0.32 K^0.56 (a) What kind of returns to scale does…

Q: Suppose that a firm’s production function is Q =10 K^(3/4)L^(1/4). The cost of a unit of labor is $1…

A: The interplay between the output that a process gives and the various inputs that go in the process…

Q: Suppose that a firm's production function is: 112 95 Its marginal product functions are: 84 MP =…

A: Production function is the maximum set of output(s) that can be produced with a given set of inputs.…

Q: Give the formulas for and plat average fixed cest, AFC, marginal cast, MC, average variable cost,…

A: Cost curves are graphical representations of the relationship between the quantity of goods or…

Q: For the cost function c = √q, show that marginal and average costs are always decreasing.

A: The firm produces goods and services which would result in the firm to incur cost. The production of…

Q: Consider a producer with the production function y = min {2L, K} and suppose the input prices are…

A: Given, The production function, Y = min(2L, K), w = 1 r = 2 a) The cost function is given by: C = wL…

Q: Suppose a firm has the following production function Q = f(K,L) = (1/2)L(2/3)K(1/3) and a total…

A: Production and cost function: The production function determines all the input bundles that produce…

Q: Q2. A firm's production function is Q = 9LZ+1)/10K(Y+1)/10 a) Find out AP of labour when K= 8 and L…

A: A firm's production function is Q = 9L(z+1)/10K(y+1)/10 Given that , Z = 0, Y = 9

Q: Emma sells hot chocolate outside of Yankees baseball games. They have two inputs in the production…

A: Given Production function f(x1,x2)=x11/3x21/3

Q: Craig and Javad run a paper company. Each week they need to produce 1,000 reams of paper to ship to…

A: Total cost refers to the total expenditure a business incurs to produce a specific quantity of goods…

Q: Suppose you run a factory whose short-run production function is given by f (L) = 180L² – 3L³. (a)…

A: Production Function studies the fundamental difference between physical input and output. It is…

Q: Consider the following short run cost function: TC = 4Q3 - 24Q² + 16Q + 100 Derive the expressions…

A: Total cost or expenses is the cost incurred by the producer in producing a certain level of output.…

Question

1. A firm has the production function y = 4LK. The marginal products are given by
MPL = 4K and MPK = 4L.
(a) Provide an expression for the long run total cost function.
(b) Now suppose that w = r = 25. Write out the expression for the long run total cost
curve, and plot it on a graph.
1
(c) With w = r = 25, derive the long run average cost curve, and plot it on a graph.
Does this firm experience increasing or decreasing average cost, as the output
increases?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Step by step

Solved in 6 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Question 6: For each of the total cost functions, write the expressions for the average cost, average fixed cost, average variable cost, and marginal cost: 1. TC (Q) = 5Q 2. TC (Q) = 120 +6Q 3. TC (Q) = 6Q² 4. TC (Q) = 140 +5Q²
Consider the following cost function. a. Find the average cost and marginal cost functions. C(x) = 1700 + 0.4x, 1700 +0.4. a. The average cost function is C(x) = The marginal cost function is C'(x) = 0.4|.
Consider a company that has fixed costs of $6,700 and a marginal cost of $26 per item. What is the company's average cost function? How many items must the company produce to have an average cost of $36.31 per item?
The production function for a product is given by q= 10K^(1/2)L^(1/2) where K is capital, and L is labor and q is output d) Now suppose w =30 and r = 120. What is the minimum cost of producing q=1000. (You must show your work by clearly writing the equations that you use to derive the cost minimizing levels of L and K.) e) Now suppose that the firm is in the short run and cannot vary the amount of capital. That is, it must use the same amount of capital as in part d). However, the firm wants to produce 1200 units of output. How much labor should it use to minimize its cost and what is the minimum cost of producing q =1200?
No hand written solution and no image
30. The production function is f(L, M) = 4L1/2 M¹2, where L is the number of units of labor and M is the number of machines used. If the cost of labor is $49 per unit and the cost of machines is $16 per unit, then what is the total cost of producing 5 units of output?