Consider a firm with production function F(K, L)=3L+8K. Assume that capital is fixed at K=12. Assume also that the rental rate (price) of capital r=10 and the wage rate (price) of labor w=3. The cost of production is the total expenditure on capital (fixed cost) and labor (variable cost). Then the cost of producing q units is ? Hint: you need to compute first the total amount of labor necessary to produce q units of output. O Clq)=114+(9q/8) O Clq)=24+3q C(q)=88+(q/12) Clq)=24+q C(q)=24+q?
Consider a firm with production function F(K, L)=3L+8K. Assume that capital is fixed at K=12. Assume also that the rental rate (price) of capital r=10 and the wage rate (price) of labor w=3. The cost of production is the total expenditure on capital (fixed cost) and labor (variable cost). Then the cost of producing q units is ? Hint: you need to compute first the total amount of labor necessary to produce q units of output. O Clq)=114+(9q/8) O Clq)=24+3q C(q)=88+(q/12) Clq)=24+q C(q)=24+q?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Consider a firm with production function F(K, L)=3L+8K. Assume that
capital is fixed at K=12. Assume also that the rental rate (price) of
capital r=10 and the wage rate (price) of labor w=3. The cost of
production is the total expenditure on capital (fixed cost) and labor
(variable cost). Then the cost of producing q units is _?
Hint: you need to compute first the total amount of labor necessary to
produce q units of output.
Clq)=114+(9q/8)
C(q)=24+3q
Clq)=88+(q/12)
C(q)=24+q
O Cq)=24+q?
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