Question

Question 4 a) For the production function f(L,K)= L13K2/3, find the long run cost function, marginal cost function and average cost function. (20 points) b) For the same production function above, find the short run variable cost function and total cost function when capital is fixed at 500 units. (10 Points) Question 5 Suppose inputs can be perfectly substituted at a constant rate of two units of labor for every one unit of capital, while producing the same level of output. Write an equation for the production function, or the equation of an isoquant. If capital is priced at $4 per unit, and labor is priced at $10 per unit, find the long run cost function. (12 points)

Answer 1

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