Question

21. value: 6.00 points Suppose that a firm has production function Q(KL) = 2LVK a. If the price of labour is 1 and the price of capital is 2 what is the long-run average cost and marginal cost curve? Long run average cost = (6/4)(Q^(-1/3)), Long run marginal cost =1*(Q^(-1/3)) Long run average cost =1* (Q^(-1/3)), Long run marginal cost = (6/4)(Q^(-1/3)) Long run average cost =(6/4)(Q^(1/3)), Long run marginal cost =1*(Q^(1/3)) Long run average cost =(6/4)(Q^-3), Long run marginal cost = 1*(Q^-3) b. Derive the short-run average total cost and marginal cost curve if K = 64. O O O Short run average cost = Short run marginal cost = 128 Short run average cost = Short run marginal cost =1/16Q Short run average cost = Short run marginal cost=1/16 Short run average cost = Short run marginal cost = 16

Answer 1

a(L, k) = 2LVR : Ponduction function . Poge 1 %3D a. W=l, MPL MRTSL,k = MPR aalak 2K at equilibnum, MRTSL, K = W/r %3D > L= 4K Put in produchion function, Q = 2X 4K X JR 3/2 %3D 213 213 k* = Q 213 k > (2*)*3 48 845

foge 2, Put k in egn. O L= 4K 213 2/5 Long - Run Total Cost : wl* + rk* 2/3 Гx @%s "(I+] 2/3 2/3 c= 3 0"s ーリョ ac %3! pe 213 %3D Ac응- 콜x응 %3D is correct. option So, 1 st b. K= 64 Q = 2LK 21 64 %3D = 16L 16 AC = MC (k is fixed imput) In short -nun, %3D Total Cast: WL TC= IX Q 16 16 MC= aTe %3D De 16 AC = IC 16 X@ %3D Se, 3rd option is orred.