2. Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet...

 

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2. Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function Q = F(L, K) = 10L0.5 K05, where L is their number of workers and K is units of capital. The wage rate is $1000, and a unit of capital costs Hannah and Sam $1000 per week. (a) Graph the isoquants F(L, K) = 10 and F(L, K) = 20. (b) What is their least-cost input combination for remodeling 100 square feet a week? (c) What is the total cost of remodeling 100 square feet a week? (d) What is their cost function C(Q)? (e) What is their average cost function AC(Q) and marginal cost function MC(Q)? 2. Hannah and Sam run Moretown Makeovers, a home remodeling business. The number of square feet they can remodel in a week is described by the Cobb-Douglas production function Q = F(L, K) = 10L0.5 K05, where L is their number of workers and K is units of capital. The wage rate is $1000, and a unit of capital costs Hannah and Sam $1000 per week. (a) Graph the isoquants F(L, K) = 10 and F(L, K) = 20. (b) What is their least-cost input combination for remodeling 100 square feet a week? (c) What is the total cost of remodeling 100 square feet a week? (d) What is their cost function C(Q)? (e) What is their average cost function AC(Q) and marginal cost function MC(Q)?