Question: Consider a firm whose production function is q = (KL)1/4 Q1a. (5 marks) Find the short-run cost function CShort(q;w, r, K ) Q1b. (5 marks)

Consider a firm whose production function is

q = (KL)1/4

Q1a. (5 marks)

Find the short-run cost function

CShort(q;w, r, K )

Q1b. (5 marks)

Find the long-run cost function

CLong(q;w, r)

Q1c. (5 marks)

By subtracting between your derived short-run cost and long-run cost, show that

the long-run cost is always lower than the short-run cost for any given level of q,

regardless of the level of K and r.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Q:

Consider a firm whose Production function is 2 = KL The input prices are denoted by wir 70 By solving the long, run Cost minimization Problem, find the long-run Cost function C (q, wir) (2) Find the...

Q:

Answers and short explanation will do. Thankyou 61. A firm in a monopolistic market faces the demand equation: Q = 25 -0.5P. where Q is the firm's output level and P is the price of a product per...

Q:

Section A. . Answer the following questions. (30 marks) The local council of a city plans to reduce pollution by imposing a tax on gasoline. To avoid any backlash from voters, they decide to impose...

Q:

i (a) What is the relative price of xd in terms of xh from the prime ministers point of view? (b) Find the policy bundle that maximizes the prime ministers utility subject to the govern- ments budget...

Q:

. Kindly assist me to answer. Firm Optimization 6. (8 points) Suppose a firm uses capital (X), labor (L), and energy (E) to produce output (Q). In the short-run, the firm cannot adjust its capital...

Q:

Please help me answer the following questions , thanks.,,, Consider the two-period endowment economy with N consumers, and a government. Assume that the current and future consumption are perfect...

Q:

Answer these correctly. Firm Optimization 6. (8 points) Suppose a firm uses capital (K), labor (L), and energy (E) to produce output (O). In the short-run, the firm cannot adjust its capital stock....

Q:

A small firm produces raw lumber in a competitive market using just capital and labor. It hires L hours of labor at wage w/hour. Capital is expensive, so it rents K units of the equipment (including...

Q:

N=0, please help me walk through this problem step by step Problem 3: Consider a firm whose technology is given by the production function: y = f (K,L) = (N+1)L +2VK. Assume that input prices for...

Q:

tax Consider the market for apple juice. In this market, the supply curve is given by QS = 10PJ 5PA and the demand curve is given by QD = 100 15PJ + 10PT , where J denotes apple juice, A denotes...

Q:

Consider the game in strategic form above between player 1 (the row player) and player 2 (the column player) a) Suppose the stage game above is played twice (T=2). Is there any SPNE in which players...

Q:

Atmospheric scientists often use mixing ratios to express the concentrations of trace compounds in air. Mixing ratios are often expressed as ppmv (parts per million volume): ppmv of X = vol of X at...

Q:

Which of the following factors are relevant when determining whether a person resides in Australia in accordance with the 'resides test'? social and living arrangements maintenance and location of...

Q:

Explain why systems are vulnerable at an organization ( e . g . Daraz ) . Chosen organization: The picture is the slide of lecture

Q:

Explain the employee benefits that are required by law.

Q:

List the types of incentive plans.

Q:

Explain an organizations strategic considerations in developing a strategic rewards program.