What is the long- run cost function for a fixed-proportions production function for which it takes two units of labor and one unit of capital to produce one unit of output as a function of the wage, w, and the price of capital, r? What is the cost function if the production function is q = L + K?
Answer to relevant QuestionsIn what types of industry would you expect to see substantial learning by doing? Why? A refiner produces heating fuel and gasoline from crude oil in virtually fixed proportions. What can you say about economies of scope for such a firm? What is the sign of its measure of economies of scope, SC?Should a firm ever produce if it is losing money (making a negative economic profit)? Why or why not?Each of the three firms in Question 3.3 has a revenue function R(q) = 100q – 2q2 and a cost function C(q) = 100 + 20q. Determine how much output each firm chooses. C When the western part of the United States was sparsely populated, many small towns had a single schoolhouse in which one teacher taught all subjects to students of all ages. Nowadays, in large cities, teachers are often ...
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