2. Assume that a firm has the following production function; q = L0.5K0.5. Its capital is fixed at K = 1. It faces a rental rate of r = $90 and a wage rate of W = $10. d. Determine the average, average variable, and average fixed cost functions. e. Determine the marginal cost function. f. Calculate the lowest cost, and associated quantity, that the firm can produce this good for in the short run. J
2. Assume that a firm has the following production function; q = L0.5K0.5. Its capital is fixed at K = 1. It faces a rental rate of r = $90 and a wage rate of W = $10. d. Determine the average, average variable, and average fixed cost functions. e. Determine the marginal cost function. f. Calculate the lowest cost, and associated quantity, that the firm can produce this good for in the short run. J
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.3P
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