1. You are given the following production function for a cost-minimizing firm: Q=500K o.5 the price of capital is $1,600 and the wage is $100. A. What type of production function is this? Can this firm ( in the long run) substitute between capital and labor and remain at the same level of output? What type of solution will it produce (interior or corner)? B. The firm wants to produce 20,000 units of output. What are the optimal levels of the capital and labor inputs? What is the total cost of production ? C. Graph (B)- include the label Q=20,000 units, Isocost label TC= , Optimal input bundle, intercept values of the isocost line, optimal levels of labor and capital D. Consider the firm faces a financial budget constraint of $20,000. If the firm seeks to maximize output , compute the optimal capital and labor inputs. Also compute the resulting quantity of output with this financial constraint L0.5. E. What is the solution to the firms Short run cost minimization problem, when the firms wants to produce 20,000 units of output, but capital is fixed at K-bar%3D4 in the short run. What is the total cost of this level of output when capital is fixed
1. You are given the following production function for a cost-minimizing firm: Q=500K o.5 the price of capital is $1,600 and the wage is $100. A. What type of production function is this? Can this firm ( in the long run) substitute between capital and labor and remain at the same level of output? What type of solution will it produce (interior or corner)? B. The firm wants to produce 20,000 units of output. What are the optimal levels of the capital and labor inputs? What is the total cost of production ? C. Graph (B)- include the label Q=20,000 units, Isocost label TC= , Optimal input bundle, intercept values of the isocost line, optimal levels of labor and capital D. Consider the firm faces a financial budget constraint of $20,000. If the firm seeks to maximize output , compute the optimal capital and labor inputs. Also compute the resulting quantity of output with this financial constraint L0.5. E. What is the solution to the firms Short run cost minimization problem, when the firms wants to produce 20,000 units of output, but capital is fixed at K-bar%3D4 in the short run. What is the total cost of this level of output when capital is fixed
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.4P
Related questions
Question
Transcribed Image Text:1. You are given the following production function for a cost-minimizing
firm: Q=500K O.5 L0.S.
the price of capital is $1,600 and the wage is $100.
A. What type of production function is this? Can this firm ( in the long run)
substitute between capital and labor and remain at the same level of
output? What type of solution will it produce (interior or corner)?
B. The firm wants to produce 20,000 units of output. What are the optimal
levels of the capital and labor inputs? What is the total cost of
production ?
C. Graph (B)- include the label Q=20,000 units, Isocost label TC= , Optimal
input bundle, intercept values of the isocost line, optimal levels of labor
and capital
D. Consider the firm faces a financial budget constraint of $20,000. If the
firm seeks to maximize output , compute the optimal capital and labor
inputs. Also compute the resulting quantity of output with this financial
constraint
E. What is the solution to the firms Short run cost minimization problem,
when the firms wants to produce 20,000 units of output, but capital is
fixed at K-bar3D4 in the short run. What is the total cost of this level of
output when capital is fixed
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning