Question

1. Determine the returns to scale of the following functions. Show your work. a) Q = 4K + 3L

b) Q = 2KL

c) Q = 10K/L

2.For each of the following production functions below, find the

 LR total cost as a function of Q: TC(Q)

 LR average total cost as a function of Q: ATC(Q)

 How does LR average total cost vary with Q? (Hint, find the derivative: dATC(Q)/dQ)

 Does this cost function exhibit economies of scale, diseconomies of scale, or constant returns to scale?

A. Q = 4L^2

B. Q = 2L

C. Q = L^1/3 3.

3.For the following cost function: TC(Q) = 10 + 2Q + 4Q^2 , find the following:

A. Fixed cost B. Variable cost C. Average fixed cost D. Average variable cost E. Average total cost

4. Given the production function: Q = 4(KL)^1/2, w = 16, r = 25, and capital is fixed at level K0.

a. Find the short-run total cost as a function of Q: STC(Q)

b. Find the short-run variable cost as a function of Q: VC(Q)

c. Find the short-run fixed cost as a function of Q: FC(Q)

Answer 1