QUESTION 5 Harryhausen's produces sushi with labor and capital The price of labor is w = 1, and the price of capital is r = 2. Suppose capital is fxed at K = 2 in the short run For simplicity, suppose the fxed cost is sunk (2) Suppose Harryhausen's production function is Q = L+K. If Harryhausen's wants to produce 3 units of output, what is the costminimizing choice of labor in the short run? What is the equation of the short run total cost curve? (b) Suppose Harryhausen's production function is Q = min{L,K}. If Harryhausen's wants to produce 1 unit of output, what is the cost minimising choice of labor in the phort run? What is the equation of the shortrun total cost curve?
QUESTION 5 Harryhausen's produces sushi with labor and capital The price of labor is w = 1, and the price of capital is r = 2. Suppose capital is fxed at K = 2 in the short run For simplicity, suppose the fxed cost is sunk (2) Suppose Harryhausen's production function is Q = L+K. If Harryhausen's wants to produce 3 units of output, what is the costminimizing choice of labor in the short run? What is the equation of the short run total cost curve? (b) Suppose Harryhausen's production function is Q = min{L,K}. If Harryhausen's wants to produce 1 unit of output, what is the cost minimising choice of labor in the phort run? What is the equation of the shortrun total cost curve?
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.1P
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Transcribed Image Text:QUESTION 5
Harryhausen's produces sushi with labor and capital. The price of labor is w = 1, and the price of
capital is r = 2. Suppose capital is fixed at K = 2 in the short run. For simplicity, suppose the fixed
cost is sunk
(2) Suppose Harryhausen's production function is Q = L+ K. If Harryhausen's wants to produce
3 units of output, what is the costminimicing choice of labor in the short run? What is the
equation of the short-run total cost curve?
(b) Suppose Harryhausen's production function is Q = min{L, K}. If Harryhausen's wants to
produce 1 unit of output, what is the costminimising choice of labor in the khort run? What is
the equation of the short-run total cost curve?
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