In the numerical example of Hamburger Heaven’s production function in Chapter 6, we examined the consequences of the invention of a self-flipping burger that changed the production function to
q = 20√KL
a. Assuming this shift does not change the cost minimizing expansion path (which requires K = L), how are long-run total, average, and marginal costs affected?
b. More generally, technical progress in hamburger production might be reflected by
q = (1 + r) √KL
Where r is the annual rate of technical progress (that is, a rate of increase of 3 percent would have r = .03). How will the year-to-year change in the average cost of a hamburger be related to the value of r?