Consider a firm with production function Q(L, K) = min (2L, K). The wage rate is w = 6, and the rental rate of capital is r = 3. (a) Derive the long-run cost function of the firm as a function of Q. (b) What types of returns to scale does this production function exhibits?
Consider a firm with production function Q(L, K) = min (2L, K). The wage rate is w = 6, and the rental rate of capital is r = 3. (a) Derive the long-run cost function of the firm as a function of Q. (b) What types of returns to scale does this production function exhibits?
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter7: Production Economics
Section: Chapter Questions
Problem 5E
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![Consider a firm with production function Q(L, K) = min
(2L, K). The wage rate is w = 6, and the rental rate of
capital is r = 3. (a) Derive the long-run cost function
of the firm as a function of Q. (b) What types of returns
to scale does this production function exhibits?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff1fc7cff-a6dc-4765-83d2-321748689e3a%2F663f01a1-c248-4261-9f2e-3301fcb09736%2Fkm8xe5e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider a firm with production function Q(L, K) = min
(2L, K). The wage rate is w = 6, and the rental rate of
capital is r = 3. (a) Derive the long-run cost function
of the firm as a function of Q. (b) What types of returns
to scale does this production function exhibits?
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