Question: Assignment MOD 7 NAME(S): & QUESTION 1. The QuickBuild Company builds houses (Q) in the Lower Mainland. It combines capital (K) and labour (L) in

Assignment MOD 7 NAME(S): & QUESTION 1. The QuickBuild Company builds houses (Q) in the Lower Mainland. It combines capital (K) and labour

(L) in its production function in the following way: Q(K,L) = K1'3L1'3

Labour cost: w = $8 Capital rental cost: v = $8 1A.

Assignment MOD 7 NAME(S): & QUESTION 1. The QuickBuild Company builds houses (Q) in the Lower Mainland. It combines capital (K) and labour (L) in its production function in the following way: Q(K,L) = K1'3L1'3 Labour cost: w = $8 Capital rental cost: v = $8 1A. What do we call this form of production function? 18. According to its production function. what returns to scale does QuickBuild enjoy? Demonstrate. What happens to output when QuickBuild doubles the amount of capital and labour used? 10. QuickBuild wants to build 12 homes. What is its cost-minimizing choice of Capital and Labour? (Hint: What is the objective function? Whatis the constraint?) 1D. Write out QuickBuild's cost equation. How much does it cost QuickBuild to build the 12 homes? NAME(S): & QUESTION 2. The QB Company builds McMansions (Q) in the Lower Mainland. It combines capital (K) and labour (L) in its production function in the following way: Q ( K, L) = K 1/3L 1/3 Labour cost: w = $10 Capital rental cost: V = $160 2A. QB wants to build 9 McMansions. What is its cost-minimizing choice of Capital and Labour? (What is the objective function? What is the constraint?) 2B. Write out QB's cost equation. How much does it cost QB to build the 9 mansions? 2C. Illustrate this optimum McMansion production choice in an isoquant diagram. Label everything

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