Firms A produces a good q using an intermediate good r and labour LA. Firm A...

 

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Firms A produces a good q using an intermediate good r and labour LA. Firm A is a price-taker and where price of labour is w and the price of r is p. The firm produces using technology FA(LA, r) = L%rl-a. |3D a) Find the cost function for Firm A. b) Firm B produces r according to FB(LB) = LB, and is a price taker in the same labour market. Firm B pays a total of T > 0 in fixed legal fees associated with the contract supplying Firm A, whereas Firm A pays 0 legal fees. Find Firm B's cost function. c) There are many firms producing qB, so p is determined by a zero profit condition. and Firm A's new cost function assuming Firm A is the only buyer of x. Find Firms A produces a good q using an intermediate good r and labour LA. Firm A is a price-taker and where price of labour is w and the price of r is p. The firm produces using technology FA(LA, r) = L%rl-a. |3D a) Find the cost function for Firm A. b) Firm B produces r according to FB(LB) = LB, and is a price taker in the same labour market. Firm B pays a total of T > 0 in fixed legal fees associated with the contract supplying Firm A, whereas Firm A pays 0 legal fees. Find Firm B's cost function. c) There are many firms producing qB, so p is determined by a zero profit condition. and Firm A's new cost function assuming Firm A is the only buyer of x. Find

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A COST FUNCTION for Firm A Fixed cost in production of Good q Cost of Intermediate good x Cost of La... View the full answer