ZuoTi.Pro
Question

Consider a firm using two inputs; capital (K) and labor (L) in production. The firm's production...

Consider a firm using two inputs; capital (K) and labor (L) in production. The firm's production technology is characterized by the following production function: Q = F(K, L) = 40K L In the short run (SR), the quantity of the capital (K) that the firm uses is fixed at K = 10 whereas the quantity of the labor input can be varied. Price of labor is $4,000 per worker and the price of capital is $2,000 per capital. (PL=$4,000 and PK=$2,000) Derive the equation of the TC as a function of Q in the short run and identify the variable and fixed cost component of the TC equation.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

WEER 12 o=UOKL Given K =10 So, o = 4OXIOL 0=400L on, l- o 400 Coming to cost, TC = whtrk TC = 4000 L + 2000K substitute halhe

0 0
Add a comment
Know the answer?
Add Answer to:
Consider a firm using two inputs; capital (K) and labor (L) in production. The firm's production...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Suppose a firm has the production function: Q=2KL, where K is capital, L is labor and...

    Suppose a firm has the production function: Q=2KL, where K is capital, L is labor and Q is quantity. If capital is fixed at 4 in the short run. Suppose the cost of a unit of capital is $2 (r=2), and the cost of a unit of labor is $4 (w=4). What is the short run total cost function in terms of Q? A. TC=4+Q B. TC=4+0.5Q C. TC=8+Q D. TC=8+0.5Q

  • Suppose a firm has the production function: Q=2KL, where K is capital, L is labor and...

    Suppose a firm has the production function: Q=2KL, where K is capital, L is labor and Q is quantity. If capital is fixed at 4 in the short run. What is the short run production function? A. Q=2L B. Q=8L C. Q=2K D. Q=8K

  • A firm uses two types of inputs, labor (L) and capital (K), to produce an output,...

    A firm uses two types of inputs, labor (L) and capital (K), to produce an output, which is sold in a perfectly competitive market. The production function is given by y = f(L, K) = L 1 6 K 1 6 for all L, K ≥ 0. The price of labor is w > 0 and the price of capital is 1. Each unit of the output is sold at price p > 0. First, we consider the short-run decision...

  • A firm produces toasters using capital (K) and labor (L). The price of capital is r...

    A firm produces toasters using capital (K) and labor (L). The price of capital is r > 0 and the price of labor is w > 0. The quantity Q of toasters produced is given by the function: Q = f(L, K) = L^(1/2) K^(1/3) (a) What type of returns to scale does the firm have? (b) Assume that the firm minimizes costs and that all factors are variable . i. Explain the conditions that hold when the plant produces...

  • A firm produces output Q by using capital K and labor L in fixed proportions, i.e....

    A firm produces output Q by using capital K and labor L in fixed proportions, i.e. Q = F (K ,L ) = min {K, L/3}. The price of a unit of labor is w = 6, the price of a unit of capital is r = 2 and the price of output is p = 20. a) Draw the isoquant for Q = 8. b) Find the marginal product of labor. Suppose that (in part c and d) the...

  • Suppose a firm uses only two inputs, labor (L) and capital (K).

    Suppose a firm uses only two inputs, labor (L) and capital (K). In the short run, the amount of capital is fixed. If the price of labor is $4, and the marginal cost of production is $8, then the marginal product of labor is 4 2 32 12 None of the other answers are correct.

  • Consider a production function of three inputs, labor, capital, and materials, given by Q= LKM

     Consider a production function of three inputs, labor, capital, and materials, given by Q= LKM. The marginal products associated with this production function are as follows: MPL = KM, MPk = LM, and MPM = LK. Let w = 5, r = 1, and m = 2, where m is the price per unit of materials. (a) Suppose that the firm is required to produce Q units of output. Show how the cost-minimizing quantity of labor depends on the quantity Q....

  • 1. The production function of a firm is f(1,k) = Vlk where l is labor and...

    1. The production function of a firm is f(1,k) = Vlk where l is labor and k is capital/machinery. a. In the short run, if the quantity of capital is fixed at 64, derive the short run total cost SC(q), average cost SAC(q), and marginal cost SMC(q) of this firm. Assume each input costs $1 per unit. At what output does the minimum of SAC(q) occur? b. If labor and capital cost r and w respectively, and the quantity of...

  • 8.13. A firm produces a product with labor and capital. Its production function is described by...

    8.13. A firm produces a product with labor and capital. Its production function is described by Q = L + K. The marginal products associated with this production function are MPL = 1 and MPK = 1. Let w= 1 and r = 1 be the prices of labor and capital, respectively. a) Find the equation for the firm's long-run total cost curve as a function of quantity Q when the prices labor and capital are w = 1 and...

  • The production of Florida strawberries uses two inputs: labor (L) and capital (K). The following production...

    The production of Florida strawberries uses two inputs: labor (L) and capital (K). The following production function describes how these inputs are combined to produce bushels of oranges. f(L,K) = 5(1/2 + 3K1/2 1) Determine what kind of returns to scale this production function exhibits (HINT: labor is the "x" variable - the one that goes on the horizontal axis). 2) What is the formula for that kind of returns to scale? (HINT: use f(L,K)) 3) What is the general...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT