Christine uses exactly 4 units of labor and 1 unit of capital to produce 1 door. (a) Write down the production function, using D as the amount of doors produced, K as the amount of capital and L as the amount of labor. Write down the maximization problem. Derive the input demand function for K and L. What is the total (long run) cost function as a function of output(D), price of labor (w) and price of capital(r)?
Christine uses exactly 4 units of labor and 1 unit of capital to produce 1 door. (a) Write down the production function, using D as the amount of doors produced, K as the amount of capital and L as the amount of labor. Write down the maximization problem. Derive the input demand function for K and L. What is the total (long run) cost function as a function of output(D), price of labor (w) and price of capital(r)?
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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Transcribed Image Text:Christine uses exactly 4 units of labor and 1 unit of capital to produce 1 door. (a) Write down the
production function, using D as the amount of doors produced, K as the amount of capital and
L as the amount of labor. Write down the maximization problem. Derive the input demand
function for K and L. What is the total (long run) cost function as a function of output(D), price
of labor (w) and price of capital(r)?
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