Consider a firm with the production function:Q(L,K) = LK%3DSuppose the wage rate, w, is $6 per unit of labor and the rental rate, r, is $24 per unit of capital.A firm wants to produce 100 units of output.Suppose that in the short run, capital is fixed at 2 units. Find the labor input required toproduce 100 units of output and the firm's short run total cost.А.Now suppose the firm is in the long run.Find the firm's cost-minimizing input combination and the total cost of producing100 units of output. How do long run costs compare to short run costs?I.Given the firm's production function, Q(L,K) = LK, do you expect the firm'slong run average cost to increase or decrease with output? Explain yourII.reasoningB.

Production function refers to the functional relationship between the quantity of goods produced and…

Consider a firm with the production function: Q(L,K) = LK Suppose the wage rate, w, is $6 per unit of labor and the rental rate, r, is $24 per unit of capital. A firm wants to produce 100 units of output. A. B. Suppose that in the short run, capital is fixed at 2 units. Find the labor input required to produce 100 units of output and the firm's short run total cost. Now suppose the firm is in the long run. Find the firm's cost-minimizing input combination and the total cost of producing 100 units of output. How do long run costs compare to short run costs? I. II. Given the firm's production function, Q(L,K) = LK, do you expect the firm's long run average cost to increase or decrease with output? Explain your reasoning

Consider a firm with the production function: Q(L,K) = LK Suppose the wage rate, w, is $6 per unit of labor and the rental rate, r, is $24 per unit of capital. A firm wants to produce 100 units of output. A. B. Suppose that in the short run, capital is fixed at 2 units. Find the labor input required to produce 100 units of output and the firm's short run total cost. Now suppose the firm is in the long run. Find the firm's cost-minimizing input combination and the total cost of producing 100 units of output. How do long run costs compare to short run costs? I. II. Given the firm's production function, Q(L,K) = LK, do you expect the firm's long run average cost to increase or decrease with output? Explain your reasoning

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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