Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function Q=F(L,K) Q=10L^0.25 K^0.25 where L is their number of workers and K is units of capital. The wage rate is $500 per week and a unit of capital costs $500 per week. Suppose that when initially producing 10 square feet a week, they use 1 unit of capital. a. What is their short-run cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ b. What is their short-run average cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ c. What is their long-run cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ d. What is their long-run average cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $
Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function Q=F(L,K) Q=10L^0.25 K^0.25 where L is their number of workers and K is units of capital. The wage rate is $500 per week and a unit of capital costs $500 per week. Suppose that when initially producing 10 square feet a week, they use 1 unit of capital. a. What is their short-run cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ b. What is their short-run average cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ c. What is their long-run cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $ d. What is their long-run average cost of remodeling 80 square feet per week? Instructions: Round your answer to the nearest whole number. $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function
Q=F(L,K)
Q=F(L,K)
Q=10L^0.25 K^0.25
where L is their number of workers and K is units of capital. The wage rate is $500 per week and a unit of capital costs $500 per week. Suppose that when initially producing 10 square feet a week, they use 1 unit of capital.
a. What is their short-run cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
b. What is their short-run average cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
c. What is their long-run cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
d. What is their long-run average cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
revised jrl 08-11-2011
where L is their number of workers and K is units of capital. The wage rate is $500 per week and a unit of capital costs $500 per week. Suppose that when initially producing 10 square feet a week, they use 1 unit of capital.
a. What is their short-run cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
b. What is their short-run average cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
c. What is their long-run cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
d. What is their long-run average cost of remodeling 80 square feet per week?
Instructions: Round your answer to the nearest whole number.
$
revised jrl 08-11-2011
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