Saxxon Fifth Avenue's production function is given by Q = L+ K. Let w = 1 and r = 2 be the prices of labor and capital, respectively. (a) Find the equation of Saxxon Fifth Avenue's longrun total cost curve. Hint: Note that labor and eapital are perfect substitutes. (b) Suppose capital is fæed at 5 units (i.e., K = 5) in the short run. Derive the equation for Sazxon Fifth Avenue's shortrun total cost curve. For simplicity, assume the fxed cost is sunk. () In a graph, draw Sazzon Fifth Avenue's shortrun total cost curve and longrun total cost curve.

Saxxon Fifth Avenue's production function is given by Q = L+ K. Let w = 1 and r = 2 be the prices of labor and capital, respectively. (a) Find the equation of Saxxon Fifth Avenue's longrun total cost curve. Hint: Note that labor and eapital are perfect substitutes. (b) Suppose capital is fæed at 5 units (i.e., K = 5) in the short run. Derive the equation for Sazxon Fifth Avenue's shortrun total cost curve. For simplicity, assume the fxed cost is sunk. () In a graph, draw Sazzon Fifth Avenue's shortrun total cost curve and longrun total cost curve.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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