Question: Company A uses 3 inputs (x 1 ,x 2 ,x 3 ) to produce output Q. Nothing is produced unless some amount of input X
Company A uses 3 inputs (x1,x2,x3) to produce output Q. Nothing is produced unless some amount of input X3 is utilized. At the current level of X3, the output Q is produced according to the production function
Q = x11/2x21/2
Denote the input prices by (W1,W2,W3) and assume the level of X3 cannot be varied in the time period under consideration but that X1 and X2 can be varied to whatever levels the firm desires.
1. Derive this firm’s total cost equation.
2. Derive and accurately graph this firm’s marginal and average cost curves.
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To derive the firms total cost equation we first need to define the cost function The cost of produc... View full answer
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