Consider a producer with the production function y = min {2L, K} and suppose the input prices are w=1 and r=2 (a) Find the cost function, average cost function and marginal cost function. (b) Does this function exhibit decreasing, increasing, or constant returns to scale?
Consider a producer with the production function y = min {2L, K} and suppose the input prices are w=1 and r=2 (a) Find the cost function, average cost function and marginal cost function. (b) Does this function exhibit decreasing, increasing, or constant returns to scale?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:2. Consider a producer with the production function y = min {2L, K} and
suppose the input prices are w=1 and r=2
(a) Find the cost function, average cost function and marginal cost
function.
(b)Does this function exhibit decreasing, increasing, or constant returns
to scale?
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