2. A firm producing hockey sticks has a production function given by: q = 2 vkl In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental rate for k is v=$1, and the wage rate for / is w=$4. (a) Calculate the firm's short-run total cost curve. Calculate the short-run average cost curve. (b) What is the firm's short-run marginal cost function? What are the SC, SAC, and SMC for the firm if it produces 25, 50, 100 and 200 hockey sticks? (c) Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will always intersect the SAC curve at its lowest point.

Microeconomic Theory
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Chapter10: Cost Functions
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2. A firm producing hockey sticks has a production function given by:
q = 2 vkl
In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental
rate for k is v=$1, and the wage rate for / is w=$4.
(a) Calculate the firm's short-run total cost curve. Calculate the short-run average cost
curve.
(b) What is the firm's short-run marginal cost function? What are the SC, SAC, and SMC
for the firm if it produces 25, 50, 100 and 200 hockey sticks?
(c) Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will
always intersect the SAC curve at its lowest point.
Transcribed Image Text:2. A firm producing hockey sticks has a production function given by: q = 2 vkl In the short run, the firm's amount of capital equipment is fixed at k = 100. The rental rate for k is v=$1, and the wage rate for / is w=$4. (a) Calculate the firm's short-run total cost curve. Calculate the short-run average cost curve. (b) What is the firm's short-run marginal cost function? What are the SC, SAC, and SMC for the firm if it produces 25, 50, 100 and 200 hockey sticks? (c) Where does the SMC curve intersect the SAC curve? Explain why the SMC curve will always intersect the SAC curve at its lowest point.
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