Question: 1 A firm produces output according to the following production function: q = 10 K^(1/4) L^(1/4) The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm wants to produce ‘q’ units of output solve the cost minimization problem. Obtain the demand for capital K* (as a function of output level q). If the firm wants to produce 30 units of output, determine how much capital it will demand. Please show your work. a. 45 b. 15 c. 4.5 d. 30
Economics: Industrial Economics
Question: 1
A firm produces output according to the following production function:
q = 10 K^(1/4) L^(1/4)
The
If the firm wants to produce 30 units of output, determine how much capital it will demand. Please show your work.
a. 45
b. 15
c. 4.5
d. 30
Question 2-
A firm produces output according to the following production function:
q = 10 K^1/4 L^1/4
The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm wants to produce 'q' units of output, solve the cost minimization problem. Obtain the demand for labor L* (as a function of output level q).
If the firm wants to produce 30 units of output, determine how much labor it will demand. Please show your work.
a. 3.6
b. 5.4
c. 12.8
d. 6.2
Question 3-
A firm produces output according to the following production function:
q = 10 K^1/4 L^1/4
The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm wants to produce 'q' units of output, solve the cost minimization problem. Obtain total cost C* (as a function of output level g).
If the firm wants to produce 30 units of output, determine how much it will cost the firm. Please show your work.
a. 180
b. 360 = Answer = TC
c. 270
d. 90
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