Q.1. Use production function q(L, K) = L K and derive the followings: (a) (b) 360€ (c) (d) Short-run and long-run profit functions Short-run and long-run cost functions Short-run and long-run supply function using Hotelling's lemma. Short-run and long-run supply function using Shephard's lemma.

Q.1. Use production function q(L, K) = L K and derive the followings: (a) (b) 360€ (c) (d) Short-run and long-run profit functions Short-run and long-run cost functions Short-run and long-run supply function using Hotelling's lemma. Short-run and long-run supply function using Shephard's lemma.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.

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Q. 1.
Use production function g(L, K) = L' K* and derive the followings:
Short-run and long-run profit functions
Short-run and long-run cost functions
Short-run and long-run supply function using Hotelling's lemma.
Short-run and long-run supply function using Shephard's lemma.
(a)
(b)
(c)
(d)

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Step 1: Define production function

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Step 2: a) Compute the short run and long run profit functions

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Step 3: b) Compute the short run and long run cost functions

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Step 4: c) Compute the short run and long run supply functions using the Hotelling's lemma

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Step 5: c) Compute the short run and long run supply functions using the Shephard's lemma

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