QUESTION 6 When Hidden City Cafe uses K units of capital and L units of labor, it can produce Q units of output with the production function Q = KVL. Each unit of capital costs r = 20, and each unit of labor costs w = 25. The level of K is fzed at 5 units in the short run For simplicity, suppose the faed cost is sunk (2) Find the equation of the firm's short run total cost curve. (b) Find the equations of the firm's shortrun average total cost curve, shortrun marginal cost curve, average variable cost curve, and average fixed cost curve (c) On a graph, draw the firm's short-run average total cost curve, average variable cost curve, and shortrun marginal cost curve. Label the critical points.
QUESTION 6 When Hidden City Cafe uses K units of capital and L units of labor, it can produce Q units of output with the production function Q = KVL. Each unit of capital costs r = 20, and each unit of labor costs w = 25. The level of K is fzed at 5 units in the short run For simplicity, suppose the faed cost is sunk (2) Find the equation of the firm's short run total cost curve. (b) Find the equations of the firm's shortrun average total cost curve, shortrun marginal cost curve, average variable cost curve, and average fixed cost curve (c) On a graph, draw the firm's short-run average total cost curve, average variable cost curve, and shortrun marginal cost curve. Label the critical points.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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University level intermediate
![QUESTION 6
When Hidden City Cafe uses K units of capital and L units of labor, it can produce Q units of output
with the production function Q = KVL. Each unit of capital costs r = 20, and each unit of labor
costs w = 25. The level of K is fized at 5 units in the short run. For simplicity, suppose the fxed
cost is sunk.
(a) Find the equation of the firm's shortrun total cost curve.
(b) Find the equations of the firm's shortrun average total cost curve, shortrun marginal cost eurve,
average variable cost curve, and average fxed cost curve.
(c) On a graph, draw the firm's short run average total cost curve, average variable cost curve, and
short-run marginal cost curve. Label the critical points.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc2410166-201b-4a97-af6a-41d165285a55%2Feedde872-74c6-42e7-9b17-c3caf9fb90b8%2Fyeuru3o_processed.png&w=3840&q=75)
Transcribed Image Text:QUESTION 6
When Hidden City Cafe uses K units of capital and L units of labor, it can produce Q units of output
with the production function Q = KVL. Each unit of capital costs r = 20, and each unit of labor
costs w = 25. The level of K is fized at 5 units in the short run. For simplicity, suppose the fxed
cost is sunk.
(a) Find the equation of the firm's shortrun total cost curve.
(b) Find the equations of the firm's shortrun average total cost curve, shortrun marginal cost eurve,
average variable cost curve, and average fxed cost curve.
(c) On a graph, draw the firm's short run average total cost curve, average variable cost curve, and
short-run marginal cost curve. Label the critical points.
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