A reasonably realistic model of a firms costs is given by the short-run Cobb-Douglas cost curve C(q)

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A reasonably realistic model of a firm’s costs is given by the short-run Cobb-Douglas cost curve

C(q) = Kq^1∕a + F,

where a is a positive constant, F is the fixed cost, and K measures the technology available to the firm.
(a) Show that C is concave down if a > 1.
(b) Assuming that a < 1, find what value of q minimizes the average cost.

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Applied Calculus

ISBN: 9781119275565

6th Edition

Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum, Brad G. Osgood, Andrew Pasquale

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Question Posted: Apr 12, 2023 04:08 AM

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A reasonably realistic model of a firms costs is given by the short-run Cobb-Douglas cost curve C(q)

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Applied Calculus

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