Question: 1 . Suppose that a firm's production function is given by: ( mathrm { Q } = mathrm { L } ^
Suppose that a firm's production function is given by: mathrmQmathrmLmathrm~K Suppose that the wage firms must pay for their workers is $ per worker and the rental rate they must pay for their capital is $ per unit.
a Calculate the firm's SR production function if the firm uses units of capital.
b Calculate the firm's SR total cost function must be as a function of Q
c Suppose the firm wants to produce units of output, but it is the SR so they cannot alter the amount of capital they use. How much labor will they need to produce these units?
d What is the shortrun total cost of producing these units.
e Calculate the costminimizing combination of L and K if the firm wishes to produce units of output when K is not fixed.
f What is the total cost of producing units in the longrun when K is flexible Compare your answer to part d
g Calculate the LR total cost function must be a function of Q Double check your answer against your answer to f for units.
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