Question

For the production function in exercise 1, let the price of labor be w and the price of capital be r.
a. The efficient usage function for labor is L* = __________________ .
b. The efficient usage function for capital is K* = __________________ .
c. Find the long-run cost functions: LTC, LAC, and LMC.
d. Show that both LAC and LMC increase at any Q when either w or r increases.



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  • CreatedNovember 18, 2014
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