A firm's technology for producing its output from labor (L) and capital (K) is The wage is
Question:
The wage is $4 per unit of labor and the cost of capital is $7 per unit of capital.a. What is the firm's MRTSLK? Does the firm have a declining MRTSLK?
b. Does the firm have increasing, decreasing, or constant returns to scale?
c. What is the firm's long-run demand for labor and capital (when labor and capital can be adjusted)?
d. What is the firm's long-run cost function?
e. Does the firm have economies of scale, diseconomies of scale, or neither?
f. What is the firm's long-run supply function?
g. Suppose the firm is producing 200 units of output initially and can't change its capital level in the short-run. What is its short-run What is its demand for labor if it decides to product Q units in the short run? cost function?
h. What is firm's short-run supply function?
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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